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Annual Report 1965-1966
The Administrator of National Banks
James J. Saxon
Comptroller of the Currency
THE UNITED STATES TREASURY, WASHINGTON
Letter of Transmittal
TREASURY DEPARTMENT,
OFFICE OF THE COMPTROLLER OF THE CURRENCY,
Washington, D.C., November 15, 1966.
SIRS : Pursuant to the provisions of section 333 of the United States Revised Statutes, I am pleased to submit the 103d Annual Report of the
Comptroller of the Currency which covers operations for the year 1965. I
am also submitting materials relating to our Office operations in 1966
through the expiration of my term today. The statistical data for 1966 will
be submitted to you as a supplement as soon as available. The present
volume, plus this supplement, will comprise the 104th Annual Report.
Respectfully,
JAMES J. SAXON,
Comptroller of the Currency.
THE PRESIDENT OF THE SENATE
T H E SPEAKER OF THE HOUSE OF REPRESENTATIVES
Contents
Title of Section
Page
The Comptroller of the Currency in Historical Perspective
I. Chartering and Entry
II. Certification of Branches
III. Action on Mergers
1
5
9
Annual Report
I.
II.
III.
IV.
V.
VI.
VII.
VIII.
IX.
X.
State of the National Banking System
Assets, Deposits, and Capital Accounts
Income and Expenses of National Banks
Structural Changes in the National Banking System
Litigation
Fiduciary Activities of National Banks
International Banking and Finance
Management Improvement
Income and Expenses of the Office of the Comptroller of the Currency.
Issue and Redemption of Currency
13
14
17
20
28
30
31
31
36
38
Appendices
A. Merger Decisions, 1965
B. Statistical Tables
C. Addresses and Selected Congressional Testimony of James J. Saxon,
Comptroller of the Currency
D. Selected Correspondence of James J. Saxon, Comptroller of the
Currency
Index
39
141
199
217
253
The
Comptroller of the Currency
in
Historical Perspective
_L he underlying goals and the basic philosophy of
this Office have been affirmed on many occasions during the past 5 years. It has appeared to some observers that we were charting a new course, one not in
the tradition of the past 100 years and more. These
last 5 years have, indeed, witnessed an infusion of new
ideas and a genuine effort to make bank regulation a
creative, positive process. In particular instances, rulings have been made that were at odds with those
of previous incumbents. Yet, even these decisions
were well within a tradition that gives wide latitude to
the Comptroller of the Currency. In this historical
review, we shall reflect on this tradition to see
how change occurs within a continuity of fundamental
policy.
This report does not pretend to give a full account
of the history of this Office and its relationships with
the other supervisory authorities.1 It does trace the
key points of change in three main categories of the
Comptroller's responsibilities for banking structure:
(1) chartering and entry; (2) certification of branches;
and (3) action on mergers. The decisions of this
Office do not, of course, fall without exception into a
logically tidy classification. Indeed, decisions made in
one area of policymaking may immediately and directly
affect those in another. For example, actions to restrict entry of new anks in a particular State or trade
area have often resi ited in a steady rise there in applications for de novo branches. Or undue restrictions
on branching have incr ased pressures to acquire new
offices through mergers or chains. Similarly, a policy
of restricting customary forms of multi-office banking
has sometimes resulted in the spread of affiliate and
satellite banking.
So previous Comptrollers, having dealt with one set
of problems, often bequeathed to their successors a legacy of other problems on which to spend their energies.
Meantime, the American economy has expanded
mightily, often growing where growth was unexpected,
occasionally retrogressing in areas that once flourished.
But, the resultant of economic forces has been to produce an economic mechanism that demands more and
more of its financial institutions. Within the past 2
decades, the most vexing problems of stabilizing the
performance of the economy have been at least partly
solved, with the consequence that agencies responsible
for regulating the commercial banking system have
recently been able to act with less trepidation. Yet,
the continuing challenge to this Office, as it must be
1
A more detailed history of the functions of the Office of
the Comptroller of the Currency will be published early in
1967.
226-601—67-
for all bank regulatory agencies, is to assure a banking
system that properly lubricates the growth process
while maintaining the confidence in the banking system that assures its solvency and liquidity. The
Office has endeavored to meet this challenge
through innovation consistent with the long tradition
of bank regulation in America.
Chartering and Entry
The first Comptroller of the Currency, Hugh McCulloch, was appointed by President Lincoln in 1863.
A long-time president of the successful Bank of Indiana,
McCulloch brought to the Office a sophisticated
knowledge of banking and exceptional administrative
ability. A satisfactory solution of the problems confronting him demanded the full use of his talents.
At the outset there were two major barriers to entry
into the National system. In the first place, State banks
were reluctant to leave the haven of a State charter
for the uncertainties of national supervision. Tightening the loosely drawn Currency Act of 1863 helped
a little; but, rewritten and liberalized, the National
Bank Act of 1864 exerted no magnetic attraction,
either to existing banks or to new capital. So, on
March 3, 1865, Congress levied a 10 percent tax on
the circulatic of State banks to force the conversion
to National j.rter of those banks wishing to maintain their nc t issue. The effect of the tax was immediate and pronounced, as State banks converted in
great numbers. In general, only relatively large banks,
committed to deposits rather than note issue, stayed
with their State charters.
For more than a decade after the establishment of
the National banking system another major restriction, which had nothing to do with the merits of a
particular charter application, inhibited entry. Under
the Currency Act of 1863, the total circulation of
Nationally chartered banks was set at $300 million.
Moreover, the original statute provided for the apportionment among the States and territories of onehalf this maximum circulation on the basis of
population and the other half on the basis of wealth,
resources, and existing banking facilities. This distribution formula was omitted from the 1864 act but
was restored on March 3, 1865. On this same day, as
a provision of the law levying the 10 percent tax on
the note issue of State banks, the Comptroller was
required until July 1, 1865, to give preference in
granting charters to State banks over new associations.
So McCulloch was, for a time, forced to travel about
the country selling the idea of a National banking
system. Furthermore, caught between contradictory
1
statutes he had to decide which of two laws took
preference. The conversion of State banks in preference to granting new charters meant that a disproportionate amount of banks in the New England and
Middle Atlantic States would enter the system, violating the "distribution rule." But since there could be
no truly National banking system without conversion
of the State banks, McGulloch and his immediate
successors chose the alternative of preferring conversion, despite the violation of the apportionment law.
Even after July 1, 1865, when preference for State
bank conversion presumably ended, Comptroller
Freeman Clarke continued the same procedure. By
July 1867, the maximum circulation of $300 million
was reached, banks in New England and the Middle
Atlantic States having received the lion's share of the
total. For more than a decade the upper limit on circulation harried the National chartering authority
and was a source of continuing annoyance to the
Southern and Western States.
Despite the requirement that he sell his wares to
an unfriendly clientele, Hugh McCulloch did not
consider himself bound to automatic approval of
charter applications. Although he never articulated
a philosophy of bank chartering, his views can be inferred from an 1864 Manual of Instructions sent to
prospective organizers of National banks and from
cryptic notes written in his own hand on letters requesting forms for charter applications. Before mailing forms for meeting procedural requirements for a
National bank charter, McCulloch insisted on having
three types of information. First, he wanted a summary of the economic potential of the community in
which the proposed bank would be located—its population, the kinds and amount of business done there, and
the prospects for growth. Second, he required "satisfactory references * * * from gentlemen of known
character and reputation" about the "character and
responsibility" of the parties proposing to organize an
association. Finally, he investigated the extent of
banking facilities in the city of the proposed bank and
in nearby communities. Many a letter of inquiry
contains such remarks as "Send law but express
opinion bank not needed" or "Delay" or "Discourage,
near Athol Depot." Procedures were less formal than
those that ultimately emerged, but the first Comptroller made an investigation of the same kind that
would be made 100 years later.
Freeman Clarke, who succeeded to the Comptrollership upon McCulloch's appointment as Secretary of
the Treasury, likewise took the view that the Comptroller could exercise wide discretion in the granting
of a bank charter. Like McCulloch, he operated
within the constraints of provisions restricting the circulation, as did the third incumbent in the Office,
Hiland R. Hulburd. At last, in the Specie Resumption Act of 1875, the limitation placed on the total
circulation of National banks was repealed. In his
Annual Report for 1875 Comptroller John J. Knox,
historian and scholar, commented on the effect of
currency restrictions:
The National banking system was intended to be a free
system, and from the beginning the organization of banks
was open to all; but the amount of circulation originally
authorized having subsequently become exhausted, the establishment of banks with circulation was, of necessity, for a
time suspended. The act of January 14, 1875, however,
removed all restrictions in this respect; and since that date
every application which has conformed to the requirements
of the law has been granted.
During Knox's tenure of just over 8 years, the view
gradually emerged that the Comptroller could play
only a passive role in the granting of charters. Wrote
Knox in the 1881 Annual Report:
The Comptroller has no discretionary power in the matter,
but must necessarily sanction the organization or reorganization of such associations as shall have conformed in all respects to legal requirements.
Thus, by the 1880s the spirit of free banking pervaded the Office. There began what many observers
have called a "charter race" between the Comptroller
of the Currency and State banking authorities. Until
about 1880 the note-issue privilege of National banks
gave Federal charters a competitive edge. Another
advantage of a National charter was its familiarity to
nonresident investors, who were more likely to commit
their capital under such a charter to newly developed
sections of the country. But after 1880, the competitive advantage swung steadily in favor of State charters, which became more attractive for several reasons.
They gave far greater latitude to bank management
by permitting larger loans to single borrowers and a
wider variety of loans and investments. More important, perhaps, were the lower reserve requirements
of most States and the smaller capitals permitted. Between 1880 and 1900 the number of National banks
increased from about 2,100 to approximately 3,700;
in the same 20-year period, the number of State banks
jumped from 650 to just over 5,000. In 1907, State
banks outnumbered National banks by nearly two to
one, though total resources of State banks were then
about the same as those of National banks.
The period from 1880 to the Panic of 1907 comes
as close to being one of free banking as this country
has ever experienced. With few exceptions, State
supervisory authorities had little discretion in granting
bank charters. At the national level variation in the
attitudes of successive Comptrollers was slight; for the
most part they approved new charters provided the letter of the law was observed. To be sure, the 1884
edition of Instructions in Regard to the Organization,
Existence, and Management of National Banks required that a new application be endorsed by a member
of Congress or be accompanied by letters from prominent citizens "vouching for the character and responsibilities of the parties, and the necessities of the community where the bank is to be located." In the 1891
and 1900 editions of this manual the "necessities"
criterion was omitted.
Under Comptrollers Knox, Cannon, and Trenholm
charters were granted routinely. Data on new-bank
formation between 1891 and 1900 suggests at first inspection that Comptrollers Lacey and Eckels may have
been more strict in their approval policy. Yet, the
decade of the 1890s was one of bad times; there were
perhaps 1,000 bank failures during these 10 years, and
investors were probably deterred by the accumulated
bank investment of the 1880s. In any case, Comptroller Eckels in 1896 urged Congress to amend the
National Bank Act to reduce minimum capital requirements in small towns, to permit branches of National banks in communities of less than 1,000, and to
lower the proportion of small-bank capital mandatorily invested in Government bonds. Comptroller
Charles G. Dawes supported the capital-reduction proposal, and it became law in the Gold Standard Act
of 1900. Henceforth, National banks in places of
3,000 inhabitants or less, might be chartered with a
capital of $25,000, and within a few years more than
2,500 of these applications were approved. From
1900 through 1907, there is little evidence of restrictions on chartering by the Comptroller.
A marked change in attitudes occurred with the
appointment of Comptroller Lawrence O. Murray in
April of 1908. The severe, if shortlived, depression of
1907-08 and its accompanying "money panic" doubtlessly colored his thinking, but his decisions marked a
more fundamental turn in the charter philosophy of
the Office. The 1909 edition of the Instructions
Relative to the Organization and Management of
National Banks required three public officials of a
community to state their "belief that the conditions
locally are such as to insure success if the bank is
organized and properly managed." In successive reports, Comptroller Murray remarked the increasing
care taken by the Office to scrutinize charter applications, observing that particular attention would be paid
to applications from small communities. He noted,
not without some wishful thinking, that State authorities were cooperating in refusing bank charters where
prospective business did not warrant them. But the
brakes applied by Comptroller Murray were eased by
his successor, John S. Williams, and in the prosperity
of World War I, State officials likewise became more
lenient. By 1920, the number of commercial banks
in the country totaled an incredible 30,000, more than
22,000 State banks and 8,000 National banks.
In the early 1920s, the Office maintained a liberal
chartering policy, Comptroller D. R. Crissinger being
especially anxious to assure charters in sufficient numbers to maintain the strength of the Federal Reserve
System. From 1924 on, however, chartering policy
became progressively more restrictive, the rejection
rate for the years 1926-30 approximating }4 the applications received. In his 1927 Annual Report,
Comptroller Mclntosh remarked that "extreme care"
should be exercised in granting charters for both National and State banks, adding that in 1926 he had
approved only 44 percent of the applications received
compared with an average approval rate of nearly
73 percent over the 8 previous years. In 1928, Comptroller John W. Pole reported that the Office was exercising "a policy of extreme care in granting charters
for National banks based primarily on needs of a community for additional banking facilities."
The years 1931-35 were devoted largely to rescue
operations. Although nearly 800 new National charters were approved in this period, more than 700 of
them were worked out with the cooperation of this
Office to save banks in difficulty. The period of free,
or nearly free, banking that had begun around 1880
had clearly come to an end well before the onset of the
Great Depression. It is testimony to the good sense of
the Comptrollers of the Currency and a substantial
number of State bank supervisors that selectivity in
chartering began as early as the mid-1920s.
More cautious attitudes were doubtlessly prompted
by the wave of bank suspensions that began with the
precipitate depression of 1920-21. Beginning in 1921,
the number of commercial banks decreased by several
hundred each year, 5,411 failing over the 9-year span
of 1921-29. From 1930 to 1933, 8,812 banks suspended, nearly half of them going under in 1933 alone.
Of the 14,000 banks suspending between 1921 and
1933,11,300 were State banks and 2,700 were National
banks. More than 90 percent of these failures were
in communities with less than 25,000 inhabitants, and
85 percent of the suspending banks had total assets
of less than $1 million.
In part, of course, the failures that began a decade
before the economic disintegration of the early 1930s
were a response to the previous high rate of bank investment. For 40 years, banks had been springing up
in hamlets and villages of 200 and 300 inhabitants; in
a South Dakota community of 300 served by a State
bank the competition became ruinous when the Comptroller of the Currency granted a National charter to
another group. County seat towns of less than 1,500
people often boasted 3 or 4 banks, and a midwestern
town with a population of 10,000 was blessed with
18. But the catastrophe of failure was the consequence of a more deep-rooted cause than "overbanking." Urbanization of the American population began
in earnest in the 1920s, inexorably taking people from
the agricultural communities and their purchasing
power away from small-town businesses. Moreover,
mortgages made on the basis of high World War I land
values went steadily into default. With the deterioration of assets that occurred when loans to farmers and
to businesses dependent upon farmers went bad, thousands of institutions found themselves in severe straits.
At the onset of the depression, frightened depositors
rushed to demand their money, with the consequence
that even good assets had to be liquidated in falling
markets. At last, as business declined disastrously,
the very best credit risks could not meet their obligations. Vigorous and imaginative rescue work by the
Federal Reserve might have saved the day, but the
monetary authorities of that time did not understand
the proper role of the central bank in a period of financial emergency.
With fewer than 100 suspensions in 1934-35, it
was clear that except for some salvage work, the crisis
was over. But there would no longer be business as
usual, at least not for many years to come. Of the
many changes in public-policy concepts, none was
more drastic than the change in attitudes toward bank
chartering. Nearly everyone in a position to make
decisions was agreed that free banking, if it meant continuing competition between State and Federal authorities, should stop. A corollary of this proposition
was that some kind of Federal control had to be exercised over bank formation under State charter. As it
turned out, the Federal Deposit Insurance Corporation
became the agency to exert this control. By the end
of 1935, a few months after the permanent plan of
Federal Deposit Insurance was introduced under the
Banking Act of 1935, more than 90 percent of United
States commercial banks were covered. Since Federal
authorities could now withhold deposit insurance, con-
siderable power would henceforth be exerted over
State chartering.
From 1935 on, Federal supervisory agencies would
also have almost unlimited discretion in regulating the
organization of new banks. Among the criteria to be
considered were the adequacy of a prospective bank's
capital structure, its future earnings prospects, the
character of its management, and the convenience and
needs of the community it would serve. Thus, standards that had been intermittently used by this Office,
and increasingly by State authorities, were written into
the law.
1936 began a 25-year period of drastic reduction in
the rate of formation of new banks. On the average,
86 new institutions annually were started from 1936—
60. This rate was not constant over the entire period,
for it began to pick up in the early 1950s as profits of
commercial banks improved in the postwar years. Actually, between 1936-45, 480 new State banks were
chartered; the figure for 1946-55 was 705 and for the
5-year period, 1956-60, 435. The corresponding figures for National banks were 55, 156, and 124. From
1936 to the end of 1960, applications for National bank
charters averaged about 50 each year, or one-sixth the
annual average from 1911 through 1935. Over the
quarter century from 1936-60, National bank charters
accounted for less than one-fifth of the nearly 2,000
banks organized.
There are several reasons why only 335 National
banks were chartered in this quarter century. Relatively low returns to capital invested in commercial
banking were partially responsible, while a 40 percent
rejection rate on applications must have deterred some
prospective bank organizers. But the most obvious
reason for the low number of bank charters was the
attitude of post-depression Comptrollers. Although
there is little discussion of chartering policies in successive Annual Reports, it is apparent that this Office
was for 25 years extremely reluctant to admit new
banks to the competition. In a drastic swing in the
pendulum of authority, "convenience and needs" were
severely scrutinized, and decisions to charter new banks
went from the extreme of free banking to the extreme
of unduly restricted approvals.
It is well-known that, beginning in 1962, this Office
encouraged applications for new charters. In 1961,
Comptroller Ray M. Gidney's last year in office, 97
applications were received. In 1962, this Office received 176 requests for new charters, the number increasing to 490 in 1963 and 468 in 1964. This total
of 1,134 charter applications was more than had been
submitted in the previous 20 years. In the 4-year
period 1962-65, this Office granted 513 new charters,
while State authorities, unquestionably stimulated to
greater liberality by the Comptroller's actions, granted
502. The public clearly understood that the closedindustry image would be changed and that, at least for
a time, a decision had been taken to increase the
banking resources of the country in trade areas where
they were deficient.
Other post-depression Comptrollers were sensitive
on occasion to the need for new banks in places where
existing facilities were plainly inadequate. These
officials were, without exception, motivated by concern
for the public interest. Yet, from 1936-61, the preoccupation of this Office was still with the problem
of bank failure, and its main objective was to preserve
existing banks. Beginning in 1961, the Office adopted
the view that banks, despite their considerable regulation, are not public utilities and, thus, are not entitled to
complete protection from competition.
While showing due concern to prevent overinvestment in banking in particular trade areas, we, at the
same time, moved to permit adequate banking services where the public interest required them. In the
Annual Report for 1964, it was noted that new
charters would have to be rejected for particular areas
once a certain level of investment was reached. As
the record shows, the rate of rejection of charter requests climbed steadily in 1963-64, reaching 70 percent
for 1965. In retrospect, the increase in new charters
granted by this Office over the years 1962-65 is seen
as a needed adjustment required by particular communities if growth in those communities was not to
be inhibited by lack of financial resources.
Certification of Branches
During the first 75 years of American commercial
banking, the right of banks to have branches was
rarely questioned. Typically, banks organized under
the early charters had only one or two branches; but
as years went on, banks in New England and the
Middle Atlantic States tended to divest themselves of
branches, not because of political opposition but because there was no economic reason for keeping them.
In this early period, branches were almost invariably
intercity. In the long-settled regions of the United
States, places requiring a bank were not without
wealthy citizens who could provide the necessary
capital should there be a prospect of a profitable business. At the same time, no saving resulted from operating in two or more cities; in fact, problems of
communication and transportation implied diseconomies of scale, where scale was achieved by
widely separated offices. The consequence was that,
by the late 1840s, there were no branches in any of
the New England States and only two in the State of
New York.
Both the first and second banks of the United States
operated profitable branches, setting a pattern for the
organization of pre-1860 branch systems in the South
and West. Because of slow communication and
great distances between branches and headquarters, it was impossible for the head office to exercise day-to-day supervision of a network of branches.
Consequently, each branch, under its own board of
directors, developed a large degree of autonomy, maintaining an independence of action far greater than
that enjoyed by branches in 20th-century America.
This same principle of organization was carried
over into the great branch systems of the West* One
of the best of them, the State Bank of Indiana, had
a structure imitated by the State banks of Ohio, Iowa,
and several other States. The board of directors of
the Bank of Indiana was resident in Indianapolis, the
capital city. Yet, each of the 13 branches was locally
organized, had its own capital subscribed by its own
stockholders, and paid its own dividends, subject only
to the approval of the supervisory board of control in
Indianapolis.
Branch systems of the kind in use today, dominated
by the head office, were found in certain border and
Southern States. Southern capital was largely committed to the plantation system and was not available
for a unit bank in each community able to support one.
Head offices of banks in these areas tended to be in
urban centers, and branches, without local capital
contributions in the areas they served, were, therefore,
directed from the top with little branch autonomy.
At the time of establishment of the National banking system there was little or no controversy over
branch banks. Examination of the legislative history
of the Currency Act of 1863 and of the National Bank
Act of 1864 reveals no special concern about branches.
Not until passage of the 1865 law levying the 10 percent tax on State bank notes was there statutory mention of the matter. This legislation allowed State
banks converting to National charters to keep their
branches provided that definite capitals were assigned
to the "mother bank and branches." There was
no apparent controversy over this section of the act.
Moreover, there is little evidence that the framers
of the legislation of 1863 and 1864 meant to preclude
branch banking. Nevertheless, two clauses in the National Bank Act were so interpreted. Section 6 of the
act required persons forming an association to specify
"the place" where business would be carried on, and
section 8 required that usual business be transacted
at "an office or banking house" located in the city
specified in the organization's certificate. This use
of singular nouns was common in State free-banking
statutes and was originally intended to outlaw the
location of offices in inaccessible places for the purpose of hindering note redemption. Nevertheless, as
a condition of granting a National charter, Comptroller Freeman Clarke refused to allow the Washington County Bank in Williamsport, Maryland, to keep
its branch office in Hagerstown. He wrote: "The
sixth section (of the law) requires that (the organizers)
shall specify in their organization certificate the particular place (not places) at which their operations
•of discount and deposit shall be carried out." Whatever the Congress had intended, this decision was
followed by Comptrollers for years to come. For decades the opinion made little difference one way or
another. In the North and East branch banking had
nearly disappeared. In the South, where in antebellum years multiple-office banking of today's type
was concentrated, many branch banks were destroyed
"by the war, were dissolved by State authorities, or
•entered the National system with each former branch
as a unit. And, in the free banking spirit that pervaded western areas, State laws were passed making it
easy to form new banks in the towns and cities that
could support them.
As a result, the branch bank question did not become an issue for many years. In 1887 and again
in 1888, the Comptroller of the Currency recommended that National banks be allowed to establish
additional offices in the head-office city, but nothing
came of the suggestion. During the 1890s, however,
there was a growing demand for increased banking
facilities in small towns. The first strong advocates
of branch banking based their case largely on rural
need, Comptroller Eckels' 1896 proposal for branches
in places of less than 1,000 population being a typical
public-policy prescription. Consequently, the force
of branch banking arguments was greatly weakened
with passage of the 1900 statute reducing to $25,000
the capital requirement for a National bank in a place
of 3,000 or less. With the ensuing rapid creation of
small banks by the hundreds, the chief argument for
branch banking was undermined. By the same legislative stroke, the ultimate potential of the antibranch
lobby in State legislatures was bolstered by thousands
of new country bank offices.
For a year or two there was continuing discussion
of the issue. In a classic profession of faith in branch
banking Comptroller William B. Ridgely, in 1902,
placed this Office squarely on the side of branch-bank
proponents. But the first economic pressure for
branching had disappeared, to be gradually renewed
as the continuing growth of cities moved their peripheries farther and farther away from the business
centers. In 1900, banks with branches accounted for
only 2 percent of resources of American banks; 20
years later, they accounted for nearly 15 percent. But
as the number of branches grew, the number of unit
banks grew also, so that in 1920 branch banks controlled only 6 percent of total banking offices in the
country. From 1920 on, branch banking increased
in relative importance, for as the number of commercial banks was cut by one-half over the next 15 years,
the number of branch-bank offices more than doubled.2
In 1935, branch banks controlled more than one-half
the resources of American commercial banks.
Since 1935, the trend toward multiple-office banks
has been uninterrupted, with the rate of increase of
branch-bank offices increasing remarkably in the early
1950s. Between 1935-50, the number of unit banks
declined to about 13,000, while the number of branchbank offices, including home offices, rose to nearly
6,500. More specifically, at the end of 1950, 1,241
banks operated 4,721 branches; 3,276 of the offices
were in the main-office city, and 2,686 were outside
the main-office city. Resources controlled by branch
banks were still just over 50 percent of the total of all
commercial banks.
In 1950, there were almost 19,000 banking offices in
the United States. By the end of 1965, this figure had
increased to more than 29,000. During this interval,
the number of unit banks fell from 12,923 to 10,678,
while the number of branch banks increased from
1,241 to 3,140. Meantime, the number of branches
soared from 4,721 to 15,486 so that the total number
of branch-bank offices rose to 18,626. Branch-bank
offices then accounted for almost 64 percent of total
banking offices and controlled approximately twothirds of the banking resources of the country.
The economic forces compelling the growth of
branch banking have been persistent and inexorable.
Moreover, branch banking would have shown even
more dramatic gains in the absence of legislation, Federal and State, passed with the primary intent of pro2
The expression "branch-bank offices" is used in this section to denote all offices of branch banks, including home
offices.
tecting unit banks from competition. This legislation
has, in some States, absolutely stopped an increase in
multi-office banking, leaving theflourishingcity institutions to squeeze themselves into ever more inefficient
banking houses. In other States, it has led to expansion in the two other forms of multi-office banking,
groups and chains, which have flourished where the
more straightforward branch-bank organizations
could not be organized.
For perhaps 2 decades after the turn of this century,
intracity branching showed more strength than intercity branching. As cities pushed outward and increasing traffic congested the streets, banks found it
progressively more difficult to reach the household
unit. It was almost precisely at this time that the
American middle class was becoming affluent enough
to make household and small personal accounts profitable. In a society of spatially separated communities,
bearing an isolation that we find hard to imagine today, uncertain communication and bad roads continued to slow the establishment of branch offices
outside the home city. Yet, even before 1920, intercity branches were increasing in a dozen states, notably
in California. After 1920, intercity branching became
the more important type, as banks moved to place
offices in the burgeoning suburbs. Underlying this
change, its character in part determined by the urbanization or a peripatetic population, have been the
increasing returns to scale in banking. In part, the advantages of larger units have been encouraged by technical advances in the processing of data, which have
been accompanied by reductions in costs of communication. More fundamental has been the advantage
to large units offirst-classmanagerial talent, for in an
increasingly complex world, financial institutions, possibly more than other business firms, require the benefits of the improving quality of management that, within certain limits, comes with size.
Statutory and regulatory resistance to this course of
economic events, while by no means evident everywhere, has been persistent in certain geographic areas.
However, at both Federal and State levels the trend
of the past half century has been toward liberalization
of 19th century supervisory judgments about branch
banks.
Comptrollers following Freeman Clarke consistently
ruled that National banks could not have branches.
In 1911, Comptroller Murray asked Attorney General
Wickersham for an opinion, and Wickersham responded that the power to branch was not implied in
the National Bank Act. In 1915, the Federal Reserve
Board recommended that legislation be passed to permit National bank branching within the main-office
city or county, and a controversy that had smouldered
for years erupted at the 1916 convention of the American Bankers Association, which adopted resolutions
opposing branch banking in any form. So vehement
was the opposition to the Federal Reserve proposal
that it was dropped. Only the devious path of the
Consolidation Act of 1918 opened the way to multipleoffice structure for National banks. This statute permitted a National bank that had converted from State
to National charter, keeping its branches, to consolidate
with another National bank, retaining the branches
involved in the consolidation. Thus, in States permitting branching, a National bank could acquire
branches by organizing a State bank with branch offices, converting the State bank to a National charter,
and then merging with it. Although an awkward
procedure, the method nevertheless enabled more than
100 National banks to acquire branches in just a few
years.
By 1920, the problem of providing banking facilities
convenient to residential areas of a city was changing
to the problem of creating outlets for mushrooming
suburbs. For years, the Office of the Comptroller had
considered the possibility of allowing metropolitan
banks to open "offices." In 1921, Comptroller D. R.
Crissinger recommended that the National Bank Act
be amended to permit limited branching, but there was
no response from Congress. Crissinger then began to
permit the use of intracity offices or tellers' windows
wherever State branching was permitted. These offices could receive deposits and cash checks but could
not make loans or carry on other business requiring
policy decisions. Again, in his Annual Report for
1922 Crissinger asked that National banks be granted
branching authority at least to the extent enjoyed by
State banks, and again he was rebuffed. Crissinger's
immediate successor, Comptroller Henry M. Dawes,
essentially an opponent of branch banking, requested
an opinion from the Attorney General about the legality of additional offices such as his predecessor had
authorized. This time the Attorney General responded favorably, holding that National banks could
operate limited-service offices within their city of location. For several years these offices served as outlets
for the considerable pressures that were building.
In 1924, the Supreme Court of the United States
upheld a lower court decision that branching by a National bank, where prohibited by a State statute, was
illegal.3 By this time the Comptroller of the Currency
had prepared recommendations for a Federal statute
governing National bank branching, and bills containing his suggestions were introduced in both the
House and the Senate in 1924. After 3 years of noisy
argument, the McFadden Act was finally passed in
1927. The law, for the first time, permitted branches
that were unlimited with respect to function. Nevertheless, many considered the McFadden Act to be an
anti-branching bill, for it permitted members of the
Federal Reserve System to establish new branches
only within the limits of "the city, town, or village in
which said association is situated if such establishment
and operation are at the time permitted to State banks
by the law of the State in question." Thus, although
National banks could henceforth establish full branches
in States permitting branches, they as well as State
member banks could not establish branches outside of
the home city.
Almost at once agitation began for liberalization of
this restrictive law. In his Annual Report for 1929,
Comptroller John W. Pole proposed that National
banks be allowed to branch over their trade areas. In
the same year, President Hoover, noting the growth
of group and chain banking, suggested to Congress
that it consider permitting National banks to branch in
limited areas. Even the American Bankers Association
began to soften its opposition to branching, indicating
that "community wide" branching in cities and "county wide" branching in rural areas might be economically justifiable. With such support, it appeared that
bills introduced by Senator Carter Glass, which would
have permitted State-wide branching and even branching across State lines to a distance of 50 miles, would
receive favorable consideration. But such sweeping
change led to bitter, if minority, opposition in the Senate, with the consequence that the law providing today's basic rule became a part of the Banking Act of
1933. In effect, this provision allows National banks
to branch in any State within the geographic limits
specifically authorized by the laws of that State. To
the basic limitation was added certain discriminatory
capital requirements for member banks branching outside their head-office cities, requirements that proved
a serious deterrent to many banks. In 1952, the law
was changed to permit member banks wishing to
branch to meet the same capital requirements of State
law for branch banks, and Comptroller Ray M. Gidney
8
See: First National Bank in St. Louis v. State of Missouri,
263 U.S. 640-668, decided January 28, 1924.
noted in his 1952 Annual Report that "provisions of
the new law are proving to be eminently satisfactory." *
National banks might be " * * * on a parity, for
all practical purposes, with State chartered banks," as
Comptroller Gidney remarked, but 17 states then limited branching, and 11 prohibited branches. Nevertheless, by 1960, National banks maintaining branches
accounted for nearly 39 percent of all commercial
banks having branches, a jump from 26 percent in
1950. At the end of 1950, 905 National banks operated 5,325 branches, and 1,424 State banks operated
6,381 branches.
During the past 5 years, this Office has taken the
position that a healthy growth of branch-bank systems
should be encouraged so as to maintain all possible
options for banking expansion. As the annals attest,
branch systems have long been consistent with economic and sociologic change in the United States.
The Office has approved de novo branches where State
law permits provided that community circumstances
indicated profitable support of a new branch. That
competition has been increased by this policy is suggested by the data. From the end of 1960 to the end
of 1965, the number of National banks maintaining
branches rose from 905 to 1,331, an increase of 48 percent. Meantime, the number of branches operated by
National banks increased from 5,325 to 8,754, a jump
of 64 percent. (Branches operated by State banks rose
in this interim from 4,918 to 6,732, an increase of 37
percent.) At the end of 1965, offices of National banks
operating branches totaled 10,085 compared with the
State bankfigureof 8,541.
The geographic consequences of recent change are
remarkably various. The stronghold of unit banking
is largely between the Rockies and the Mississippi
River, with Montana, Wyoming, Colorado, Nebraska,
Kansas, Oklahoma, Texas, Minnesota, and Missouri
lying within this area. Illinois, West Virginia, and
Florida are the only other States that absolutely prohibit branches in any form. Yet, branching is so
restricted in a few of the so-called "limited" branching
*A floor on capital requirements of National banks and
their branches is established by Federal law. Specifically, "the
aggregate capital of every National banking association and
its branches shall at no time be less than the aggregate minimum capital required by law for the establishment of an equal
number of National banking associations situated in the various places where such association and its branches are situated." However many branches a National bank may have
in one place, the capital requirements for all of them is only
what it would be for one bank.
States that they, for all practical purposes, exclude
themselves from the economic benefits of branch
banking systems.
Action on Mergers
For half a century after passage of the Sherman
Act, banks were not threatened with litigation, nor did
the more specific prohibitions of sections 7 and 8 of the
Clayton Act seem a cause for apprehension. Mergers
were considered a means of rescuing foundering institutions rather than a way to monopolistic restraints.
Moreover, many observers felt that since banking was
regulated by specific Federal and State statutes the
antitrust laws did not generally apply.
The first faint rumblings of commercial bank exposure to Sherman Act prosecution came in the 1940s.
In 1945, the Justice Department filed suit against a
New York trade association, composed of mutual savings banks and trust companies but including one
commercial bank, alleging a section 1 Sherman Act
violation. Three years later, a similar suit was
brought against the Chicago Mortgage Bankers Association, which included several commercial banks,
the defendants being charged with fixing minimum
fees and rates in connection with their lending activities. After more than a decade of inattention to such
activity, the Justice Department, in 1961, brought a
price fixing charge against certain New Jersey banks
alleging collusion in setting service and other charges.
Similar action was shortly taken against banks in
Dallas, Texas, and in certain Minnesota cities. In
each case, groups of commercial banks were charged
with conspiring to fix various rates and terms, whether
of interest to be paid or charges for services. In each
instance, proceedings were terminated by consent decree or other agreement, and some defendants were
fined after pleading no contest. Early in 1962, this
Office instructed all National banks to determine service charges and banking hours without collusion,
whether through clearinghouse agreements or otherwise. Individual boards of directors were made responsible for determination of such practices, and
National bank examiners were instructed to insure
compliance. As noted in the 101st Annual Report
of this Office, we have maintained a close surveillance
on National banks regarding such activity.5
Section 8 of the 1914 Clayton Act aimed at the
prohibition of interlocking corporate managements.
5
See 101st Annual Report of the Comptroller of the Currency, 1963, p. 29.
After much congressional deliberation, directors and
other officers of banks above a certain size were specificially prohibited from sitting on more than one
board, though exceptions in this and subsequent
amending legislation, notably the Banking Act of
1935, made the law fuzzy and uncertain of enforcement. The Federal Reserve Board has held hearings
on alleged section 8 violations, but these cases have
not found their way into the courts on appeal. Data
on exemptions granted by the Federal Reserve as authorized by the statutes are not available.
In 1962, the Comptroller's Advisory Committee on
Banking recommended "* * * that the law and its
application by the supervisory authorities should restrict interlocking directorates, and not only between
competing commercial banks (as is now the case) but
also between commercial banks and certain other types
of competingfinancialinstitutions." 6 This Office has
consistently taken the view that conflicts of interest in
the financial structure should be removed and that
laws regarding interlocking directorates should be
clarified and strengthened.
Like clearinghouse association agreements, acquisition of commercial banks through purchase by nonbanking corporations of stock or assets came under administrative and legislative scrutiny in the 1940s.
After years of discussion among the Federal supervisory agencies and the Department of Justice, the
Board of Governors of the Federal Reserve System in
1948 initiated a proceeding under sections 7 and 11 of
the Clayton Act against the Transamerica Corporation, a West Coast holding company, alleging a violation of section 7 because of systematic acquisition of
the voting stock of independent banks in 5 States. The
Board's 1952 order to Transamerica to divest itself of
47 majority-owned banks was set aside by a circuit
court of appeals in 1953, and the Supreme Court refused to review the lower court's decision.
Meanwhile, some congressional sentiment was developing for legislation that would bring bank
acquisitions under the control of Federal bank regulatory agencies. For example, a 1945 bill sponsored by
Senator Kefauver would have exempted bank acquisitions from section 7 of the Clayton Act, requiring that
bank mergers be approved by the Comptroller of the
Currency, the Federal Reserve Board, or the Federal
Deposit Insurance Corporation. Neither this nor sub8
National Banks and the Future, Report of the Advisory
Committee on Banking to the Comptroller of the Currency,
1962, p. 94.
sequent attempts to include Federal agency control of
bank acquisitions secured congressional approval.
When the 1950 Celler-Kefauver Amendment to the
Clayton Act was passed, merger by asset acquisition
as well as stock acquisition was brought within the section 7 provision of the Clayton Act. Bank mergers
were not included in this legislation, probably because
the bill would not have passed if they had been
included.
Despite repeated attempts to bring mergers and consolidations under the proscriptions of section 7, notably
by Congressman Celler and Senator Sparkman in 1955,
a succession of bills for this purpose failed to gain congressional approval. After a decade of consideration,
the Bank Merger Act of 1960 provided for administrative control of bank mergers by the Federal agencies
and made explicit the consideration of banking as well
as competitive criteria in determining the merits of a
particular merger. In addition to the effects of merger
on competition, regulatory agencies were to consider
at least five banking criteria, including "the convenience and needs of the community to be served."
Careful review of the legislative history of the 1950
and 1960 legislation left no doubt in the minds of most
economists and lawyers about the intent of Congress
to exclude commercial bank mergers from Clayton
Act prosecution. But, the 1960 statute did not explicitly state such exclusion, and in the Philadelphia
bank decision of 1963, the Supreme Court, though
wondering aloud why the Celler-Kefauver Amendment
made no explicit mention of mergers not subject to
Federal Trade Commission jurisdiction, could perceive
"the basic Congressional design" and could infer that
bank mergers were subject to the Clayton Act.
This opinion, when coupled with the decision in
the Lexington case, subjects commercial banks to more
stringent antitrust regulation than applies to firms in
unregulated industry. The 1966 Amendment to the
Bank Merger Act has imposed a single set of standards
upon the banking agencies, the Department of Justice,
and the courts by which to assess the legality of a
merger. This Office must now make an antitrust
judgment and, finding a substantial lessening of competition, can approve a merger only if banking advantages outweigh the competitive disadvantages. The
Department of Justice can now postpone a bank merger
by merely commencing an action against it instead
of seeking an injunction in the courts.
As we have remarked before, in the expansion of
banking, merger may often be preferable to new char10
ters or de novo branching.7 The Comptroller of the
Currency, with other Federal regulatory agencies, is
now unnecessarily hindered in determining the optimum allocation of commercial-bank resources. Decisions made by this Office in the light of 104 years of
experience are presently subject to interference by a
department of the Government with no experience in
bank regulation and a patent inability to perceive the
nature of competition in banking and to ascertain relevant banking markets.
For the past 5 years, the authority of this Office has
been chiefly exercised to assure a new and vital competition among commercial banks and between commercial banks and nonbank financial intermediaries.
In that period, the Office issued more than 6,000
decisions and interpretations under existing statutes
and has recommended to Congress legislation that
would permit further changes in the direction of truly
competitive financil markets. In a substantial number of instances, decisions have increased the powers
of commercial banks and so their freedom to compete. On many occasions, however, a determination
has been made to restrain activity with probable
anticompetitive effects, our actions against possible collusion among banks with respect to service
charges and banking hours typifying rulings of this
kind.
The preoccupation of the Office has been to assure
the economic entry of resources into commercial banking by means that have appeared appropriate in each
particular case. Charters, de novo branches, and
mergers have been approved in accordance with a long
tradition of adjusting the supply of banking services
to the demand for them. This Office has made economic judgments not only with an eye to historical
experience but with due consideration for the future
financial requirements of a growing economy.
Observers of the financial community frequently remark the rise of a recent enthusiasm in commercial
banking, an esprit that is carrying the industry forward
through a rapid rate of technical innovation to new
peaks of service to the community. This change was
under way in the 1950s. It was the role of this Office,
through creative regulation based on sound precepts
of law and economics, to encourage this spirit, this new
competitive sense, and so to strengthen the resource
base of this country.
7
102nd Annual Report of the Comptroller of the Currency,
"The Banking Structure In Evolution," 1964, p. 5.
ANNUAL REPORT, 1965-1966
INDEX
Statistical Tables
Table No.
Title
1 Commercial banks, banking offices, and total assets,
by class of bank, end of 1964 and 1965
2 Total assets of selected financial institutions,
1962 through 1965
3 Assets, liabilities, and capital of National banks,
1964 and 1965
4 Demand and time deposits, by class of bank, year
end 1964 and 1965
5 Income and expenses of National banks, 1964 and
1965
6 Number of National banks and banking offices, by
States, December 31, 1965
7 Status of applications for National bank charters,
and charters issued, by States, calendar 1965..
8 Status of applications for conversion to National
bank charters, and charters issued, by States,
calendar 1965
12
Page
13
14
15
16
18
21
22
23
Table No.
Title
9 Charters, liquidations, and capital stock changes
of National banks, calendar 1965
10 Branches of National banks: in operation December
31, 1964, opened, discontinued, or consolidated,
calendar 1965; and branches in operation December 31, 1965
11 Status of de novo branch applications of National
banks, by States, calendar 1965
12 Branches of National banks opened for business, by
community size and size of bank, calendar 1965.
13 Mergers, calendar 1965
14 Comparative statement of income and expenses of
the Office of the Comptroller of the Currency, by
calendar years 1959-65
15 Comparative statement of financial condition of
the Office of the Comptroller of the Currency,
by calendar years 1959-65
Page
24
25
26
27
27
37
38
I. State of the National Banking System
During 1965, the assets of National banks rose by
$29.0 billion, or 15.2 percent. Of this increase, the
conversion of Chase Manhattan Bank accounted for
7.3 percent. At year's end, the 4,815 National banks
and the seven District of Columbia non-National banks
supervised by the Comptroller of the Currency had
total assets of $220.2 billion, or 58.1 percent of the
assets of all commercial banks. The 1965 rate of increase in assets of National banks exceeded the 1963
and 1964 increases of 6.0 and 11.7 percent, respectively.
The 1965 growth of National banks was greater
that that of State member or insured nonmember
banks. The number of National banks increased by
42, or 0.9 percent, while the number of banking offices
increased by 840, or 6.6 percent. The comparable
percentage changes for State member banks and banking offices were —3.2 and —0.3, while for insured
nonmember banks, they were 0.8 and 3.4.
The relative growth rates of different classes of finan-
cial institutions have been of considerable interest in
recent years. The commercial banking system experienced a rate of growth of assets of 8.8 percent—
below the 10.9 percent of 1964 but greater than the
1963 performance of 5.3 percent. This was similar to
the experience of other financial institutions. Asset
growth for mutual savings banks fell from a 9.1 percent
rate in 1964 to 7.4 percent in 1965. Savings and loan
associations, whose assets increased by 11.0 percent in
1964, had an 8.5 percent increase in 1965. Credit
unions' growth declined from 15.1 percent during 1964
to 12.2 percent during 1965.
The impressive gains of the National banking and
the commercial banking system were a part of the continued expansion of the economy. The gross national
product (in current dollars) climbed from $631.7
billion in 1964 to $681.2 billion in 1965, or 7.8 percent. Corporate profits before taxes increased 13.0
percent, personal income rose 7.9 percent, and the
money supply grew 4.7 percent.
TABLE 1
Commercial banks, banking offices, and total assets, by class of bank, end of 1964 and 1965
[Dollar amounts in billions]
Number of banks
Total assets
Number of banking offices
Class of bank
All commercial banks
National banks*
State member banks
Insured nonmember banks
Noninsured banks
1964
1965
Percent
change
1964-65
13, 771
13,811
0.3
* 28, 274 29, 453
4,780
1,448
7,266
277
4,822
1,402
7,324
263
0.9
* 12, 773 13,613
4,695
4,681
'10,472 10, 824
334
335
— 3.2
0.8
-5.1
•Includes 7 non-National banks in the District of Columbia
which are supervised by the Comptroller of the Currency.
1964
1965
Percent
change
1964-65
Percent
change
1964-65
1964
1965
4.2
$348. 4
$378. 9
8.8
6.6
191.2
98. 1
55.8
3.3
220.2
93.6
61.5
3.5
15.2
-4.6
10.2
6.1
-0.3
3.4
0.3
NOTE : Data may not add to totals because of rounding.
r Rpvispd.
13
TABLE 2
Total assets of selected financial institutions, end of 1962 through 1965
[Dollar amounts in millions]
1962
Type of institution
Commercial banks*
Mutual savings banks*
Savings and. loan associations
Credit unions
$298,196
46, 121
93, 605
7,188
1963
$314, 056
49, 702
107, 559
8, 128
1964
$348,433
* 54, 238
* 119,355
9,359
1965
$378, 899
58, 232
129, 442
10, 505
Percent increases
1964-65
8.8
7.4
8.5
12.2
*Last call date.
Revised.
r
II. Assets, Deposits, and Capital Accounts
Total resources of National banks grew 15.2 percent
during 1965. Their earning assets (loans, securities,
Federal funds sold, and direct lease financing) increased 16.6 percent, while loans and discounts gained
22.2 percent, or $21.3 billion. Total securities displayed only a modest 5.4 percent increase. As a percentage of total assets, therefore, loans and discounts
increased from 50.3 percent at the end of 1964 to 53.3
percent at the end of 1965, but securities dropped from
28.6 percent to 26.2 percent during the same period.
Holdings of direct and guaranteed U.S. Government obligations by National banks decreased by 4.9
percent, following an increase in 1964 of 0.5 percent.
The relationship of these holdings to total assets fell
from 17.6 percent in 1964 to 14.6 percent in 1965.
State and local obligations held increased 21.2 percent
during 1965, compared to a 13.5 percent increase during 1964. These securities were 10.3 percent of total
assets at the end of 1965, compared to 9.8 percent at
the end of 1964. In each of the past 5 years, strong
loan demand increased the position of loans relative to
securities.
State member banks, despite a decrease of total assets of 4.6 percent during 1965, had an increase in
loans and discounts of 0.5 percent. Total security
14
holdings of State member banks decreased 9.1 percent.
Among these securities, holdings of direct U.S. obligations decreased 17.4 percent while holdings of State
and local government obligations increased 3.6 percent.
The aggregate loan-deposit ratio of National banks
rose from 56.3 percent at the end of 1964 to 60.3 percent a year later. For State member banks the ratio
increased during the same period from 59.2 percent to
62.8 percent.
Deposits of National banks increased by $24.2 billion, or 14.3 percent. The growth of time and savings
deposits ($15.0 billion, or 21.2 percent) exceeded that
of demand deposits ($9.2 billion, or 9.4 percent), thus,
continuing past trends in deposit growth. Demand
deposits fell from 58.2 percent of total deposits at the
end of 1964 to 55.6 percent at the end of 1965.
Total capital of National banks increased by $2.4
billion, or 15.9 percent, during 1965 compared to an
11.1 percent increase in 1964. As a percent of total
assets, total capital increased slightly from 7.92 percent
in 1964 to 7.96 percent in 1965. There was a further
increase in the use of debenture financing during the
year, although the percentage increase was less than
in 1964.
TABLE 3
Assets, liabilities, and capital of National banks, 1964 and 1965
[Dollar amounts in millions]
Dec. 31, 1964,
4,773 banks
Amount
Cash, balances with other banks, and cash items in process of collection
U.S. Government obligations, direct and guaranteed....
Obligations of States and political subdivisions
Securities of Federal agencies and corporations not
guaranteed by United States
Other bonds, notes, and debentures
Total securities
,
Federal funds sold
Direct lease financing
Loans and discounts
Fixed assets
Customers' liability on acceptances outstanding
Other assets
Total assets...
Dec. 31, 1965,
4,815 banks
Percent
distribution
Change
Percent
distribution
$34, 066
33, 537
18, 592
17.92
17.64
9.78
$36, 880
31,896
22, 541
16.83
14.56
10.29
$2,814
- 1, 641
3,949
8.26
-4.89
21.24
1,832
405
.97
.21
2,383
490
1.09
.22
551
85
30.08
20.99
54,366
28.60
57,310
26.16
2,944
5.42
821
81
95, 577
2,789
652
1,761
.43
.04
50.27
1.47
.34
.93
1,433
271
116,833
3, 158
926
2,292
.66
. 12
53.32
1.44
.42
1.05
612
190
21, 256
369
274
531
74.54
234. 57
22.24
13.23
42.02
30.15
190, 113
100. 00
219, 103
100. 00
28, 990
15.25
LIABILITIES
Demand deposits of individuals, partnerships, and
corporations
Time and savings deposits of individuals, partnerships,
and corporations
Deposits of U.S. Government
,
Deposits of States and political subdivisions
Deposits of foreign governments and official institutions,
central banks, and international institutions
Deposits of commercial banks
Certified and officers' checks, etc
Total deposits
Demand deposits
Time and savings deposits
Federal funds purchased
Liabilities for borrowed money
Acceptances executed by or for account of reporting
banks and outstanding
Other liabilities
Total liabilities .
6,929
9.34
64, 763
3,787
13,647
34.07
1.99
7.18
75, 676
3,488
15,833
34.54
1.59
7.23
10,913
-299
2, 186
16.85
-7.90
16.02
10, 733
2,487
169, 617
98, 660
70, 957
827
299
5.64
1.31
89.22
51.90
37.32
.43
. 16
2,734
12,077
2,923
193, 860
107, 881
85, 979
1,497
172
1.25
5.51
1.33
88.48
49.24
39.24
.68
2,734
1,344
436
24, 243
9,221
15, 022
670
— 127
12.52
17.53
14.29
9.35
21.17
81.02
-42.47
666
3,656
.35
1.92
944
5, 196
.43
278
1,540
41.74
42. 12
175,065
92.08
201, 669
92.04
26, 604
15.20
475
28
4,286
7,208
2,657
394
.25
.01
2.26
3.79
1.40
.21
1,134
29
4,937
7,967
2,903
464
.52
.01
2.25
3.64
1.33
.21
659
1
651
759
246
70
7.96
2,386
74, 200
81, 129
2.37
CAPITAL ACCOUNTS
Capital notes and debentures
Preferred stock
Common stock
Surplus
Undivided profits
Reserves
Total capital accounts
Total liabilities and capital accounts.,
15,048
7.92
17,434
190, 113
100. 00
219, 103
138.74
3.57
15. 19
10.53
9.26
17.77
15.86
15
TABLE 4
Demand and time deposits, by class of bank, year end 1964 and 1965
[Dollar amounts in millions]
1965
1964
Class of bank
Dollar
amount
All commercial banks:
Total deposits
Demand
Time
Members of Federal Reserve System:
Total deposits
Demand
Time
National banks:
Total deposits
Demand
Time
State member banks:*
Total deposits
Demand
Time
Insured nonmember banks :f
Total deposits
Demand
Time
Noninsured banks:
Total deposits
Demand
Time
* Includes 4 non-National banks in the District
which are supervised by The Comptroller of the
t Includes 3 non-National banks in the District
which are supervised by The Comptroller of the
16
of Columbia
Currency.
of Columbia
Currency.
Percent
distribution
Dollar
amount
Percent
distribution
$308, 427
100.0
$333, 302
100.0
180, 199
128, 228
58.4
41.6
185, 124
148; 178
55.5
44.5
255, 724
100.0
275, 517
100.0
151,384
104, 340
59.2
40.8
154,475
121, 042
56.1
43.9
169,617
100.0
193, 860
100.0
98, 660
70, 957
58.2
41.8
107, 881
85, 979
55.6
44.4
86, 108
100.0
81, 657
100.0
52, 725
33, 383
61.2
38.8
46, 594
35, 063
57.1
42.9
50, 507
100.0
55, 518
100.0
27, 308
23, 199
54. 1
45.9
29, 161
26, 357
52.5
47.5
2, 197
100.0
2,267
100.0
1 508
689
68.6
31.4
1,488
779
65.6
34.4
NOTE: Data may not add to totals because of rounding.
III. Income and Expenses of National Banks
The composition of earning assets of National banks
continued to shift from securities to loans during 1965,
while deposits continued to shift from demand to time.
These shifts are reflected in bank revenues and expenses for 1965.
During 1965, net income after taxes of National
banks was $1.39 billion, an increase of $173.9 million,
or 14.3 percent over 1964. Operating revenues for
1965 exceeded the 1964 level by $1.6 billion, a 19.1
percent increase. Among significant changes in the
components of operating revenue were an increase in
interest and discount on loans of 21.9 percent, and an
increase in interest and dividends on securities of 9.7
percent. Of the $1.6 billion increase in current operating revenue, interest and discount on loans accounted
for $1.1 billion or 73.5 percent, and interest and dividends from securities, for $175 million or 11.2 percent.
Within the securities sector, striking results were
achieved from the switching of securities during 1965.
From year end 1964 to 1965, direct U.S. Government
holdings declined 4.9 percent. However, with higher
rates, 1965 revenue from this source rose 1.7 percent.
Holdings of other securities, consisting primarily of
municipals, increased 22.0 percent, and 1965 revenue
from this source rose 25.6 percent.
Operating expenses were higher in 1965 than in
1964 by $1.3 billion, or 22.1 percent. Among signifi-
cant changes in the components of operating expenses
were an increase in interest on time and savings deposits of 32.7 percent, and an increase in employees'
salaries, wages, and benefits of 13.0 percent. Of the
$1.3 billion rise in current operating expenses, interest
on time and savings deposits represented $740 million,
or 56.5 percent. The funds needed to meet the strong
demand for loans could only be drawn from the market
by offering higher rates of interest on time and savings
deposits. With the cost of banking's basic raw material rising, banks were under pressure to switch out of
lower yielding loans and securities, and to tap the financial markets through all available instruments.
Net current operating earnings increased by $248.7
million, reaching $2.48 billion, an 11.1 percent increase
above the 1964 level. Nonoperating adjustments involved a deduction of $482.2 million, yielding net income before related taxes of $2.00 billion, or 8.4 percent above the 1964 level.
For 1965, taxes on net income were less than in
1964 by 3.0 percent. Federal income taxes paid declined 4.8 percent while State income taxes paid rose
16.5 percent. Total cash dividends declared were
15.3 percent above the 1964 level, while 1965 net income after dividends was $704 million, or 13.5 percent
above the 1964 performance.
17
TABLE 5
Income and expenses of National banks, calendar 1964 and 1965
[Dollar amounts in millions]
Amount
Number of banks*
Capital stocks at par valuef
Capital accountsf
Current Operating Revenue:
Interest and dividends on—
U.S. Government obligations
Other securities
Interest and discount on loans
Service charges and other fees on banks' loans. . .
Service charges on deposit accounts
Other charges, commissions, and fees
Trust department
Other current operating revenue
Change, 1964-65
1965
196iI
Percent
distribution
Amount
Percent
distribution
4,815
$4, 629. 1
$16,111.7
4,773
$4, 163. 1
$14, 297. 8
Absolute
Percent
42
$466. 0
$1,813.9
.88
11. 19
12.69
$1, 189. 7
601.7
5, 232. 4
93.7
441.4
133.3
290.3
165.2
14.60
7.38
64.22
1. 15
5.42
1.64
3.56
2.03
$1,210.1
755.9
6, 376. 6
117.6
490.1
159.2
356.2
239.5
12.47
7.79
65.70
1.21
5.05
1.64
3.67
2.47
$20.4
154.2
1, 144. 2
23.9
48.7
25.9
65.9
74.3
1.71
25.63
21.87
25.51
11.03
19.43
22.70
44.98
8, 147. 7
100. 00
9, 705. 2
100. 00
1, 557. 5
19. 12
664.8
1,210.8
266.0
33.5
2,262. 7
19.5
350.8
11.24
20.47
4.50
.57
38.25
.33
5.93
743.4
1, 368. 7
308.4
36.4
3,002. 4
25.9
409.1
10.29
18.95
4.27
.50
41.56
.36
5.66
78.6
157. 9
42.4
2.9
739.7
6.4
58.3
11.82
13.04
15.94
8.66
32.69
32.82
16.62
206.2
900.6
3.49
15.22
244.7
1, 084. 7
3.39
15.02
38.5
184. 1
18.67
20.44
Total Current Operating Expenses
5, 914. 9
100. 00
7, 223. 7
100.00
1, 308. 8
22.13
Net Current Operating Earnings
2, 232. 8
248.7
11. 14
16.40
—6.25
4.85
Total Current Operating Revenue
Current Operating Expenses:
Officers' salaries
Employees' salaries and wages
Officer and employee benefits
Fees to directors
Interest on time and savings deposits
Interest and discount on borrowed money
Net occupancy expense of bank premises
Furniture and equipment—depreciation and
Other current operating expenses
2,481.5
Recoveries, Transfers from Valuation Reserves, and
Profits:
On securities:
Profits on securities sold or redeemed
Recoveries
. .
Transfers from valuation reserves
On loans:
Recoveries
Transfers from valuation reserves
All other
43.3
1.6
39.2
25.69
.93
23.25
50.4
1.5
41. 1
25.97
.77
21. 17
7.1
—0. 1
76
19.3
57.6
4 53
11.44
34. 16
9.0
4.64
18.24
29.21
1.4
35.4
56.7
16. 1
-0.9
18.42
83.42
-1.56
Total Recoveries, Transfers from Valuation
Reserves, and Profits
168.6
100. 00
194. 1
100. 00
25.5
15.12
Losses, Chargeoffs, and Transfers to Valuation Reserves:
On securities:
Losses on securities sold
Chargeoffs on securities not sold.
Transfers to valuation reserves
On loans:
Ghargeoffs
Transfers to valuation reserves
All other . .
49.7
4.4
41.3
8.93
.80
7.42
49. 1
4.0
41. 1
7.26
.59
6.08
-0.6
-0.4
-0.2
-1.21
-9.09
-.48
13.5
365 6
82.4
2.42
65.64
14.79
16.6
483.4
82. 1
2.45
71.48
12. 14
3.1
117.8
-0.3
22.96
32.22
— .36
556.9
100. 00
676.3
100. 00
119.4
21.44
154.8
8.39
Total Losses, Chargeoffs, and Transfers to Valuation R e s e r v e s . . . .
Net Income Before Related Taxes
See footnotes at end of tables.
18
1,844.5
1, 999. 3
1.9
TABLE 5—CONTINUED
Amount
Taxes on Net Income:
Federal
State
Total Taxes on Net Income
Net Income
Dividends on Capital:
Cash dividends declared on common stock
Cash dividends declared on preferred stock
Total cash dividends declared
Net Income After Dividends
Occupancy Expense of Bank Premises:
Officers' salaries
Employees' salaries and wages
Officer and employee benefits
Recurring depreciation on bank premises and
leasehold improvements
Maintenance, repair, and uncapitalized alteration costs of bank premises, and leasehold
improvements
Insurance, utilities, etc
Rents paid on bank premises
Taxes on bank premises and leasehold improvements
Change, 1964-65
1965
1964
Percent
distribution
$579. 7
51.5
Amount
Percent
distribution
Absolute
Percent
$552. 1
59.9
— $27.6
8.4
-4.76
16.31
631.2
612.0
-19.2
-3.04
1,213.3
1,387.3
174.0
14.34
591.5
1.3
681.8
1.5
90.3
0.2
15.27
15.38
592.8
683.3
90.5
15.27
704.0
83.5
13.46
620.5
1.5
52.8
6.3
.33
11.71
1.39
1.7
56.9
7.0
.32
10.98
1.36
0.2
4. 1
0.7
13.33
7.77
11.11
81.8
18.12
96.4
18.58
14.6
17.85
56. 1
74.6
110. 1
12.44
16.53
24.42
60.9
88.3
128.9
11.73
17.01
24.83
4.8
13.7
18.8
8.56
18.36
17.08
68.0
15.06
78.9
15. 19
10.9
16.03
451.2
100. 00
519.0
100. 00
67.8
15.03
96.5
3.9
21.38
.86
105.5
4.4
20.34
.85
9.0
0.5
9.33
12.82
Total
100.4
22.24
109.9
21. 19
9.5
9.46
Net occupancy expense
350.8
77.76
409. 1
78.81
58.3
16.62
Gross occupancy expense
Less:
Rental income from bank premises
Other credits
Recoveries credited to valuation reserve
(not included in recoveries above):
On securities
On loans
Losses charged to valuation reserves (not
included in losses above):
On securities
On loans
Stock dividends (increases in capital stock). .
2.6
106.0
3. 1
78.0
0.5
—28.0
19.23
—26. 42
32.3
225.9
153.5
14.8
260.2
302.4
—17.5
34.3
148.9
—54. 18
15. 18
97.00
Ratio to Current Operating Revenue:
Salaries, wages, and fees
Interest on time and savings deposits
All other current expenses
23 43
27 77
'21.40
r
Total Current Expenses
Net Current Earnings
Employees at Year end:
Building occupancy and maintenance:
Officers
Other employees
Banking Operations:
Officers
Other employees
72 60
74.43
27 40
25.57
Number
166
16, 978
Number
208
17,822
42
844
25.30
4.97
62, 775
300, 976
67, 149
326, 673
4,374
25, 697
6.97
8.54
•Number of banks at the end of year, but figures of income,
expenses, etc., include banks which were in operation only
part of the year.
fFigures are averages of amounts reported for the June and
Percent
22 14
30.93
21.36
Percent
December call dates in the year indicated and the December
call
date in the previous year.
r
Revised.
19
IV. Structural Changes in the National
Banking System
In 1965, 78 National bank charters were issued for
newly organized banks. Five States, California (11),
Texas (8), Florida (7), Alabama (6), and Illinois (5),
accounted for 37 of the 78, or almost one-half of the
primary charters. No charters for new banks were
issued in 26 States.
During 1965, the Comptroller of the Currency approved 81 consolidations, mergers, and absorptions,
in which the resulting bank was a National bank.
This compared with 91 in 1964 and 90 in 1963. Completed transactions totaled 76, compared with 91 in
1964. During the year, there were 25 conversions of
State-chartered banks to National banks.
At the end of 1965, there were 8,758 branches of National banks in operation, or 799 more than on December 31, 1964. During the year, 841 branches
opened for business as National bank branches, in-
20
cluding 587 de novo branches, 162 branches of newly
converted banks, and 92 branches acquired through
merger, while 42 existing branches were discontinued
or consolidated. Six States accounted for 498, or approximately 62 percent, of the 799 net additional bank
offices. These were New York (200), California
(96), Pennsylvania (59), Virginia (51), Ohio (50),
and Michigan (42).
Communities of less than 50,000 in population had
517, or 61.5 percent, of the 841 branch openings in
1965. Those communities with over a million in population had 159 openings, or approximately 19 percent
of the branch openings. National banks with total
resources of less than $50 million each had 289 branch
openings or 34.4 percent of the total, while National
banks with over a billion dollars each in total resources
had 265 branch openings, or 32 percent of the total.
TABLE 6
Number of National banks and banking offices, by States, Dec. 31, 1965
National banks
Number of
branches
Total
13, 573
123
40
173
57
1,742
0
167
4
47
0
209
45
177
122
1,837
117
196
9
55
195
25
2
6
0
63
26
23
41
30
15
120
40
94
0
254
28
23
118
130
69
177
42
103
417
376
129
193
199
177
90
22
29
42
191
10
78
50
109
1
33
28
64
55
2
27
18
0
17
2
18
186
319
397
6
64
18
0
17
32
22
236
412
494
199
101
114
50
143
35
73
147
34
198
30
42
224
222
12
373
4
48
15
104
9
37
98
197
7
224
0
99
19
94
21
5
126
25
5
149
4
419
52
956
261
5
515
25
209
783
53
566
86
1, 154
291
47
739
247
221
1, 156
57
25
33
76
*545
13
27
*118
31
79
110
39
1
5
27
25
545
9
15
50
15
79
98
39
0
20
6
51
0
4
12
68
16
0
12
0
1
176
37
200
0
55
31
325
340
0
24
0
2
201
70
276
545
68
58
443
371
79
134
39
3
3,484
86
5
4
65
95
117
29
5
58
0
1
37
55
117
11
3
0
195
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
57
2
9
417
122
101
170
81
47
21
32
0
3
417
59
75
147
40
17
6
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire....
50
93
97
193
37
96
50
126
3
51
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont. ,
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Virgin Islands
District of Columbia—all f.
15
*Includes 1 bank organized under section 11 of the Federal
Deposit Insurance Act.
1,331
8,758
4,815
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut.
Delaware
District of Columbia
Florida
United States.
Number o
With branches
Unit
f Includes National and non-National banks in the District of
Columbia which are supervised by the Comptroller of the
Currency.
21
TABLE 7
Status of applications for National bank charters,* and charters issued,* by States, calendar 1965
Received}
Approved
Abandoned
Rejected
Pending
Dec. 31, 1965
Charters
issued
United States.
188
27
120
16
25
78
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
District of Columbia
Florida
2
0
0
4
24
4
6
0
0
23
0
0
0
2
0
0
0
0
0
0
2
0
0
2
19
2
6
0
0
16
0
0
0
0
4
0
0
0
0
1
0
0
0
0
1
2
0
0
0
6
6
0
0
1
11
3
3
0
0
7
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
3
3
0
8
0
3
3
1
4
0
1
0
0
1
0
0
0
0
1
0
2
0
2
2
0
3
0
0
2
0
0
0
1
0
1
0
0
5
1
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
Maryland
Massachusetts. . . . . . .
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire.. . .
2
4
5
1
8
8
3
1
1
1
0
1
1
0
2
2
0
1
0
1
1
3
2
0
4
4
3
0
1
0
0
0
1
0
0
1
0
0
0
0
1
0
1
1
2
\
0
0
0
0
1
2
1
0
2
4
0
1
0
0
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon.
Pennsylvania
Rhode Island
4
2
5
1
0
6
5
1
1
0
0
0
1
0
0
1
0
1
0
0
4
2
3
1
0
4
3
0
0
0
0
0
0
0
0
0
2
0
1
0
0
0
1
0
0
1
0
0
0
0
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Virgin Islands
Puerto Rico
Guam
2
0
6
10
1
0
2
5
2
6
3
1
2
1
0
0
2
5
0
0
1
0
1
2
0
0
0
0
2
0
4
3
1
0
0
5
1
1
3
0
1
0
0
0
0
0
0
0
1
0
0
0
0
1
0
0
0
0
0
•Excludes conversions.
22
1
0
7
2
0
0
0
0
0
3
0
0
1
1
flncludes applications pending as of Dec. 31, 1964.
3
1
2
0
0
4
0
1
0
0
0
0
1
8
1
0
2
3
0
1
1
0
0
0
TABLE 8
Status of applications for conversion to National bank charters, and charters issued, by States, calendar 1965
Approved
Rejected
Charter
Dec. 31, 1965
United States.
32
25
25
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
District of Columbia....
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Virgin Islands
•Includes applications pending as of Dec. 31, 1964.
23
TABLE 9
Charters, liquidations, and capital stock changes of National banks, calendar 1965
Number
of
banks
Capital stock
Common
Increases:
Banks newly chartered:
Primary organizations
Reorganizations
Conversions of State banks
Capital stock:
Preferred: 3 cases by new issues
Common:
288 cases by statutory sale
568 cases by statutory stock dividend
2 cases by statutory consolidation
46 cases by statutory merger
Capital notes and debentures: 68 cases by new issue
Total increases
Decreases:
Banks ceasing operations:
Voluntary liquidations:
Succeeded by National banks
Succeeded by State banks
No successor
Statutory consolidations
Statutory mergers
Conversions into State banks
Merged or consolidated with State Banks (Public Law 706)
Receivership
Capital stock:
Preferred: 6 cases by retirement
Common:
7 cases by statutory reduction
3 cases by statutory consolidation
9 cases by statutory merger
Capital notes and debentures: 6 cases by retirement
Total decreases
Net change
Charters in force Dec. 31, 1964, and authorized capital stock
Charters in force Dec. 31, 1965, and authorized capital stock
24
Capital
notes and
debentures
Preferred
$36,112,500
277, 232,437
$255, 000, 000
$657, 900
20, 659,422
321,552,716
351, 500
13, 129, 335
907, 500
669, 037, 910
, 565, 400
408, 857, 500
663, 857, 500
1,475,000
6, 000, 000
0
0
0
1, 262, 500
6, 825, 000
2, 500, 000
321, 330
1, 637, 865
312,440
1, 391, 370
5, 152, 000
21,404,175
321,330
5, 152, 000
647, 633, 735
32
4,780 4, 291, 748, 449
1, 244, 070
28, 356, 330
658, 705, 500
475, 214, 100
4,812 4, 939, 382, 184
29, 600,400
1, 133,919,600
TABLE 10
Branches of National banks: in operation Dec. 31, 1964, opened, discontinued, or consolidated calendar 1965; and branches in
operation Dec. 31, 1965
Branches in
operation
Dec. 31, 1964
United States
opened for
business
Jan. 1Dec. 31, 1965
Existing branches
discontinued or
Branches in
consolidated
operation
Jan. 1Dec. 31, 1965
Dec. 31, 1965
'42
'8,758
2
7
10
102
0
15
1
2
0
0
0
0
0
'6
0
0
0
0
0
123
40
173
57
1,742
0
167
4
47
0
100
39
90
0
244
23
24
110
126
62
20
1
4
0
11
9
0
9
4
7
0
0
0
0
1
4
1
1
0
0
120
40
94
0
254
28
23
118
130
69
Missouri
Montana
Nebraska
Nevada
New Hampshire.
171
303
355
6
42
14
0
16
30
17
16
21
43
0
22
4
0
1
2
5
1
5
1
0
0
0
0
0
0
0
186
319
397
6
64
18
0
17
32
22
New Jersey
New Mexico. . . .
New Y o r k . . . . . .
North Carolina. .
North Dakota. . .
Ohio
Oklahoma
Oregon
Pennsylvania.. ..
Rhode Island. . .
390
46
'756
248
5
465
23
r
199
724
52
30
7
f210
13
0
50
2
10
62
1
1
1
'10
0
0
0
0
0
3
0
419
52
'956
261
5
515
25
209
783
53
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Virgin Islands
161
34
179
0
53
27
'274
r
322
0
24
0
2
19
3
21
0
2
4
52
20
0
0
0
0
4
0
0
0
0
0
1
2
0
0
0
0
176
37
200
0
55
31
325
340
0
24
0
2
r
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
District of Columbia
Florida
106
38
166
47
r
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kentucky. .
Louisiana..
Maine....
Maryland
Massachusetts. . .
Michigan
Minnesota
District of Columbia—all J.
•Includes 587 de novo branches, 162 branches of newly converted banks and 92 branches acquired through merger.
t Includes 66 de novo branches, 136 branches of newly converted banks, and 8 branches acquired through merger.
22G-601—«7
7, 959
3
1, 646
0
152
3
45
0
17
78
{Includes National and non-National banks in the District
of Columbia which are supervised by the Comptroller of the
Currency.
r
Revised.
25
TABLE 11
Status of de novo branch applications of National banks, by States, calendar 1965
Received*
United States
1,065
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
District of Columbia
Florida.
16
7
16
13
175
0
18
0
Approved
657
Rejected
Abandoned
Pending
Dec. 31, 1965
157
1
1
2
2
29
0
0
2
0
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
2
17
0
27
13
1
11
16
7
0
8
3
0
2
4
0
Maryland
Massachusetts
,
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire....
31
37
73
0
17
2
0
0
3
4
5
3
13
0
2
1
0
0
0
1
New
New
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
45
10
123
32
1
64
3
9
75
2
12
2
25
13
1
8
0
1
12
1
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Virgin Islands
25
4
31
0
4
4
56
18
0
3
0
2
0
2
0
6
5
0
36
0
36
0
1
District of Columbia—all f
•Includes applications pending as of December 31, 1964.
•{"Includes National and non-National banks in the District
26
of Columbia which are supervised by the Comptroller of the
Currency.
TABLE 12
Branches of National banks openedfor business, by community
size and size of bank, calendar 1965
In cities with population:
Less than 5,000
5,000 to 24,999
25,000 to 49,999
50,000 to 99,999
100,000 to 249,999
250,000 to 499,999
500,000 to 1,000,000
Over 1,000,000
1965
176
259
82
56
53
25
31
159
Total
*841
By banks with total resources (in millions of dollars):
Less than 10.0
10.0 to 24.9
25.0 to 49.9
50.0 to 99.9
100.0 to 999.9
Over 1,000
Total
119
106
64
60
227
265
*841
•Includes 587 de novo branches, 162 branches of newly converted banks, and 92 branches acquired through merger.
TABLE 13
Mergers,* calendar 1965
Applications carried over from 1964
Applications received 1965
Disposition of applications 1965:
15
77
Withdrawn
Applications pending December 31, 1965
Transactions completed 1965:
Mergers
Consolidations
Purchase of assets
3
7
59
5
12
Total
76
Aggregate total of capital stock and capital accounts for the certificates issued, 1965
Merging,
Charter or
consolidating,
purchasing bank
or selling bank
Combined
Capital stock
Capital accounts
$470, 298, 596
1,492,914,898
$24, 227, 204
81,999,991
$491, 519, 326
1,552,439,088
•Includes mergers, consolidations, and purchase and sale transactions, where the resulting
bank is a National bank.
27
V. Litigation
with that aspect of the Smithfield decision which called
for review on the need issue. Judge Fox found this
to be a matter committed to the Comptroller's unreviewable discretion.
However, in Southern Michigan National Bank of
Coldwater v. Saxon and First National Bank of
Quincy (W.D. Mich. 1966) and Bank of Haw River
A. Branch Litigation
v. Saxon the courts followed the Smithfield lead and
received evidence de novo on the issue of need and
convenience. In the Michigan case, Chief Judge
The U.S. Supreme Court has agreed to consider two
Kent found that the Comptroller had not abused his
cases involving the extent to which State statutory
discretion in approving the challenged branch, while in
limitations on branch banking apply to National banks.
the North Carolina case Judge Stanley found that he
At issue is the Utah law which provides that banks
had.
may only branch by means of merger or acquisition of
an existing bank. The Comptroller's position is that,
The Comptroller's approval of the application of a
once a State expressly authorizes branches, the FedNational bank located on a U.S. military reservation
eral law incorporates only that part of the State law
to branch off the reservation was sustained in First
dealing with State restrictions on branch location and
Hardin National Bank, et at. v. Fort Knox National
capitalization. In addition, the Comptroller urges
Bank, C.A. No. 5046 (D.C. W.D. Ky.). Plantiff banks
that the Court should not make the Utah restriction
unsuccessfully contended that Fort Knox is a Fedapplicable to National banks because the anticompetieral enclave located outside the State of Kentucky and
tive nature of the Utah provision runs counter to
that a bank located there could not branch "into
congressional policy favoring competition. The GovKentucky." The court of appeals affirmed this opinion
ernment's brief was filed by the Solicitor General on
on May 26,1966.
August 25, 1966. Walker Bank and Trust v. Saxon,
A corporation composed of State banks sought, and
and the First National Bank of Logan and Commercial was granted, an injunction against the opening of a
Security Bank v. Saxon (Nos. 51, 73, 88).
National bank facility about 100 feet from the National
bank's branch. The facility was held to be an illegal
The U.S. Court of Appeals for the Fourth Circuit
branch, and not an extension of an existing office as
has held that the Administrative Procedures Act does
the Comptroller contended. State Chartered Banks
not require the Comptroller to hold an administrative
in Washington, et ah v. Peoples National Bank of
hearing prior to his issuance of a National bank branch
Washington, James J. Saxon, Comptroller, Intervenor,
certificate. The court, in vacating the district court
U.S.D.C. W.D. Wash. (1966). See also W. M.
order annulling and enjoining the issuance of the
Jackson v. First National Bank of Valdosta, No. 21821
branch certificate, also upheld the Comptroller's posi(5th Cir. 1965).
tion that only the location and capitalization restricThe Comptroller granted preliminary approval for
tions of State law bind the Comptroller. The case
a branch of a National bank in the State of Wisconsin.
was then remanded to the district court for a review
This action has been challenged in American State
de novo on the issues of public interest, need, and
necessity. First National Bank of Smithfield v. Saxon, Bank, Kenosha, Wisconsin v. James J. Saxon
and First National Bank of Smithfield v. First National (D.C.D.C.). The Comptroller urges that savings and
Bank of Eastern North Carolina, 302 F. 2d 267 (4th loan associations, allowed to branch under State law,
do "the banking business" within the meaning of the
Cir. 1965).
National Bank Act provision (12 U.S.C. 36(h)),
Since Smithfield, three district courts have conwhich permits National banks to branch where State
sidered challenges to the Comptroller's approval of
banking institutions are so authorized. The court
new branches on the ground that the needs and condenied the motion of the Wisconsin Banking Comvenience of the community would not be served by
missioner to intervene as a party plaintiff. The case
the addition of a new branch. In American Bank
and Trust Company v. Saxon and Dart National Bank is still pending in the U.S. District Court for the
District of Columbia.
248 F.S. 324 (W.D. Mich. 1965), the court disagreed
Twenty-seven new cases involving bank branch approvals, new charters, and regulations relating to
National bank powers were filed from April of 1965,
through August 1966. Fifteen such cases were pending at the earlier date.
28
Of the six bank merger cases now pending in the
courts under this statute, opinions on preliminary matters have been rendered in two. Both upheld the posiThe following pending cases challenge the Comption of the Comptroller and the Congress that the new
troller's discretion in approving new bank charters:
act changes the law respecting the antitrust aspects of
1. William R. Farris v. Indian Hills National bank mergers, and allows the Comptroller to approve
Bank and James J. Saxon (D.G. Neb.) G.A. No.
a bank merger if the convenience and needs of the com02146, 1964;
munity outweigh, in his discretion, any anticompetitive
2. Citizens Bank of Hattiesburg v. James J.
effects a merger might have.
Saxon C.A. No. 1998 (D.C.S.D. Miss. 1966);
In a suit filed October 8, 1963, United States v.
3. Warren Bank v. James J. Saxon, G.A. No.
Crocker-Anglo National Bank, Citizens National Bank
28290 (E.D. Mich. S. Div. 1966);
and Transamerica Corporation (U.S.D.C.N.D. Cali4. First National Bank of Abbeville, et al. v.
fornia, Civil Action No. 41,808), the court ruled that
Saxon, C.A. No. 12,158 (W.D. La. 1966);
the operative law respecting bank mergers was the 1966
The District Court in Citizens National Bank of
Bank Merger Act and remanded the cause to the
Maplewood, et al. v. James J. Saxon and West Side Comptroller with directions to conduct a hearing and
National Bank (U.S.D.C.E.D. Mo.) dismissed a comto make specific findings under the standards of the
plaint based solely on the allegation that the Compnew law. In doing so, the court stated Congress' introller had not afforded the plaintiffs administrative
tent to be that "there should be made available in
due process. Plaintiffs have appealed to the Court of
determining the validity of bank mergers the experAppeals for the Eighth Circuit.
tise of persons familiar with banking and with operating procedures of banks." In accordance with the
terms of the order, a hearing was conducted by this
C. Regulation Litigation
Office on November 14, 1966. The Comptroller's
findings in that proceeding will be reviewed by the
A number of investment bankers have challenged
court under 1966 Bank Merger Act standards.
the Comptroller's Investment Securities Regulation,
The second opinion of a court on the place of the
which rules certain securities eligible for purchase,
Bank Merger Act of 1966 in antitrust litigation was
dealing in, underwriting, and unlimited holding by
rendered on October 13, 1966 in United States v.
National banks. The plaintiffs specifically challenged
Provident National Bank and Central-Venn National
the ruling that New York Port Authority bonds are
Bank of Philadelphia and James J. Saxon, Comptroller
eligible for purchase. The threshold issue is plaintiffs'
of the Currency, Intervenor (U.S.D.C.E.D. Pennsylstanding to sue. Baker, Watts & Company, et al. v.
vania, Civil Action No. 40032). Chief Judge Thomas
James J. Saxon, C.A. No. 97-66 (D.C.D.C. 1966).
J. Clary, denying defendants' motion to dismiss, said,
A trade association representing a group of Georgia
however, that "the only suit open to Justice to enjoin
insurance agents has challenged the Comptroller's rula bank merger lies solely within the ambit of the Bank
ing that a National bank may act as agent for the sale
Merger Act of 1966." This case is scheduled for trial
of insurance incidental to banking transactions. The
in early 1967. Another ruling of Judge Clary reComptroller has moved to dismiss the complaint on
affirms the privilege of an agency to maintain the
the ground that the plaintiff insurance agents lack
confidentiality of the confidential sections of examinastanding to challenge a regulation by the Comptroller
with respect to National bank powers. Georgia Asso- tion reports, even if the agency is a party to a suit.
The case of U.S. v. Third National Bank of Nashciation of Independent Insurance Agents, Inc., et al. v.
ville, et al., D.C.M.P. Tenn., Civil Action No. 3849,
James ]. Saxon, Comptroller of the Currency, C.A.
was the first case fully tried under the Bank Merger
No. 9846 (N.D. Ga. Atlanta Div. 1965).
Act of 1966. The trial lasted for approximately seven
weeks between April 25, 1966 and June 14, 1966.
Final oral arguments were held on October 6,1966 and
D. Merger Litigation
it is anticipated that Chief Judge Miller's opinion and
The most important development affecting bank
findings of fact will be handed down before the end
merger litigation in recent years came with the passage
of November. Remarks made by Judge Miller in the
into law of the Bank Merger Act of 1966 on February
course of final argument by counsel indicated that the
21,1966.
court was of the opinion that the Bank Merger Act of
B. New Bank Charter Litigation
29
1966 substantially modified the old Clayton Act tests
of competition and that the convenience and needs of
the community could well be the controlling factor
in any bank merger attack by the Justice Department.
The status of the remaining suits contesting the
legality of bank mergers is as follows:
In United States v. Mercantile Trust Company,
National Association, and Security Trust Company
and Comptroller of the Currency James J. Saxon
(U.S.D.C.E.D. Missouri, Civil Action No. 65C-241
(1)), the trial date has been set for March 28, 1967.
Under advisement by the court is the Comptroller's
motion to dismiss this action.
On October 19,1966, the Department of Justice filed
suit protesting the merger of two banks in Texas. The
Comptroller moved to dismiss the complaint on Oc-
tober 26, 1966. United States v. First City National
Bank, Southern National Bank and James J. Saxon,
Comptroller of the Currency, Intervenor (U.S.D.C.
S.D. Texas, Civil Action No. 66-H-695).
The sixth case under the 1966 Bank Merger Act
involved the merger of the First National Bank of
Hawaii and Cooke Trust Company. As the Bank
Merger Act defines the F.D.I.C. as the responsible
agency when a merger involves an uninsured institution
(Cooke Trust), the Comptroller's motion to intervene
was denied, and the F.D.I.C. has intervened. A motion by the bank to lift the automatic injunction was
successful, and these two institutions were permitted
to merge pending trial of the case. United States v.
First National Bank of Hawaii and Cooke Trust Company, et al. (U.S.D.C. Hawaii, Civil Action No. 2540).
VI. Fiduciary Activities of National Banks
The value of assets administered by National bank
trust departments increased markedly in 1965. At year
end, these departments had investment responsibility
for assets having a total market value of $89.5 billion,
compared to $75.2 billion at the end of 1964. Pension,
profit sharing, and similar employee benefit trusts held
assets valued at $28.6 billion. With adjustments for
the effects of conversions, security price appreciation,
and changes in reporting definitions, this would indicate an inflow of funds into new and existing accounts in excess of $5 billion.
During 1965, 52 applications for fiduciary powers
were filed by National banks, of which 34 were approved. This brought the total number of National
banks authorized to have trust departments to 1,865.
The addition of these 34 banks to the ranks of those
already authorized to exercise fiduciary powers will
broaden the availability of these services to the public
and widen the opportunity for such banks to serve
their customers.
The increase in asset values was paralleled by the
inauguration of several fiduciary activities by National
banks which will enable them to provide a broader
scale of trust department services to their customers.
Perhaps the most significant of these was the establishment of the commingled investment account by First
National City Bank of New York, a means for the collective investment of agency accounts. This was effected through the modification of the traditional
common trust fund device to add the features deemed
necessary by the Securities and Exchange Commission
30
to permit compliance with the Securities Act of 1933
and the Investment Company Act of 1940.
To meet the challenges posed by the expanding
scope and tempo of these activities, an increased emphasis was placed upon the training of our trust examiners. It was decided that the main effort should be
toward qualitative improvement. During the year,
5 appointments were made to the position of Representatives in Trusts, and 10 appointments were made to
the intermediate position of Associate in Trusts. Local conferences with trust examiners and Washington
personnel were held in Memphis, St. Louis, Los Angeles, Daytona Beach, Denver, New York, Cleveland,
Atlanta, and Minneapolis.
A training school for new trust examiners was held
in Washington, D.C. early in 1966. A distribution
system was introduced whereby all trust personnel receive copies of all letter rulings issued by the Washington, D.C. Office. In addition, a seminar on trust
department problems and procedures was held in
Washington in 1966 for the regional counsels.
The trust department annual reports, reflecting market values of assets of accounts where National banks
had investment responsibility, were drawn upon to
provide the basis for an article appearing in The National Banking Review, June 1966, entitled "Bank
Trust Investments in 1965." The article also reflected
the results of the Office's annual survey of common
trust funds. Tables B-24 and B-25 contain data taken
from this article concerning bank trust assets and common trust funds.
VII. International Banking and Finance
The number of foreign branches of National banks
increased during 1965 from 138 to 196. Their total
resources increased from $3.3 billion on December 31,
1964, to $7.2 billion on December 31, 1965, an amount
which exceeds the total assets of National banks in each
State but seven. At the end of 1965, foreign branches
of National banks constituted 93.5 percent of total foreign branches of U.S. banks. This percentage was
76.7 percent at the end of 1964 and by November 1966,
it had increased to 94.2 percent. These figures reflect
the conversion of Chase Manhattan Bank (with 34
foreign branches) to a National bank on September 23,
1965.
The Canadian Government has proposed a new
banking act in 1965 which contains provisions under
which the growth of an American-owned Canadian
bank would be restricted.
This Canadian proposal and other problems involving the attitude of foreign governments toward United
States international banking operations led to a study
of the regulation of foreign banking in the United
States. This study, carried out with the encouragement and assistance of this Office, was published by the
Joint Economic Committee of the Congress in July
1966 and by "The National Banking Review" in September 1966. The study concluded that existing regulation of foreign banking in the United States by the
several states involved a diversity of policy which failed
to take into account the foreign policy and foreign
trade implications of international banking. This
failure resulted in some foreign governments imposing
unnecessary restrictions upon United States banking
operations abroad. Based upon this study, Senator
Jacob Javits introduced, toward the end of the 89th
Congress, a bill for federal control of foreign banking
(S.3765).
Also, during 1965, the Office was called upon to
justify for the House Banking and Currency Committee
the position it had taken earlier that a National bank
might hold directly as well as indirectly stock interest
in foreign banks as a means of conducting its overseas
operations. The position taken bore fruit in July 1966
when Congress, by amendment to the Bank Holding
Company Act of 1956, made specific provision for the
exercise of the power of National banks to acquire and
hold direct and indirect investments in foreign banks.
VIII. Management Improvement
The organization chart shown in this section depicts
the allocation of major administrative responsibilities
in this Office. In December 1965, the national and
regional advisory committees on banking policies and
practices were established and are now operating on
a continuing basis. The regional counsel program,
placing trained attorneys in each of the 14 National
bank regions, was inaugurated in 1964 and was fully
operative in 1965 and 1966. More deputy regional
administrators were assigned to the field offices to facilitate the overall decentralization policy. In 1965,
an official of this Office was appointed to maintain a
continuous liaison with the Federal Deposit Insurance
Corporation.
The merit promotion plan announced in 1965
provides for the regular evaluation of all examining personnel and substantial salary rewards and incentives to those favorably appraised. The success of
this program in improving the quality of the examining
force and of bank supervision generally is being fully
realized.
Several additional steps were taken in 1965 in the
area of personnel administration. A colorful recruiting pamphlet, World of Banking; The Challenges of
a Career as a National Bank Examiner, was published.
This booklet was favorably received by the banking
industry and by campus counselors, whose requests for
copies and for further information greatly exceeded
all projections. Further, employee communications
received a boost from the inauguration of an intraOffice newsletter, The National Bank Examiner. Initial response to this publication has been gratifying.
The information services program, which originated
in this Office with the publication of the Comptroller's
Manual for National Banks, the Comptroller's Manual
for Representatives in Trusts, and The National Banking Review, continues to thrive. Two additional
manuals are available: Comptroller's Policy Guidelines
for National Bank Directors and Instructions, Procedures, Forms for National Bank Examiners. The
booklet Duties and Liabilities of Directors of National
Banks was thoroughly updated in 1965 and has main31
tained its position as one of the most popular issuances
of the Office.
The Annual Report of the Comptroller of the Currency continues in the new format that marked the
centennial report for the year 1962. The Annual
Report contains descriptions of the state of the National banking system and of the operations of this
Office and official documents relating to such crucial
public issues as merging and branching. The general
policy statements for the 1963 and 1964 Annual Re-
ports are available in reprint form. These are Years
of Reform: A Prelude to Progress {1963) and The
Banking Structure in Evolution: A Response to Public
Demand (1964). In December of 1965, outstanding
articles from The National Banking Review were
gathered and published in Studies in Banking Competition and the Banking Structure, Collected in this
one volume is much of the best recent work on the
special characteristics of competition and market
structure in the banking industry.
REGIONAL ORGANIZATION
Region
Regional administrators
Headquarters
1
Elmer J . Peterman
Boston, Mass
2
3
4
5
Charles M. Van Horn
R. Goleman Egertson
John W. Shaffer, J r
Page Cranford
New York, N.Y
Philadelphia, Pa
Cleveland, Ohio
Richmond, Va
6
7
8
Joseph M. Ream
Joseph G. Lutz
William A. Robson
Atlanta, Ga
Chicago, 111
Memphis, Tenn
9
Douglas T. Bushman
Minneapolis, Minn
PaulL. Ross
Norman R. Dunn
John R. Thomas
Kenneth W. Leaf
Arnold E. Larsen
Kansas City, Mo
Dallas, Tex
Denver, Colo
Portland, Oreg
San Francisco, Calif
10
11
12
13
14
32
States
Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont.
New Jersey, New York.
PennsylvaniaIndiana, Kentucky, Ohio.
Delaware, District of Columbia, Maryland, North
Carolina, Virginia, West Virginia.
Florida, Georgia, South Carolina.
Illinois, Michigan.
Alabama, Arkansas, Louisiana, Mississippi,
Tennessee.
Minnesota, North Dakota, South Dakota, Wisconsin.
Iowa, Kansas, Missouri, Nebraska.
Oklahoma, Texas.
Arizona, Colorado, New Mexico, Utah, Wyoming.
Alaska, Idaho, Montana, Oregon, Washington.
California, Hawaii, Nevada.
of the Currency
Offiae bf tH»
Comptroller
of the
Currency
National Advisory
Committee on Banking
Policies and Practices
I
Director,
Department of Banking
and Economic Research
r
Deputy
Comptroller
for Trusts
Deputy Comptroller
for International
Banking and Finance
Director
International
Division
Regional Advisory
Committees on Banking
Policies and Practices
1
Deputy Comptroller
of the
Currency
Administrative Assistant
to the
Comptroller
Deputy Comptroller
for Bank Supervision
and Examination
Deputy Comptroller
for FDIC Affairs
I*
Chief
Representative
in Trusts
Regional Administrators
of National Banks
\ s-
Chief National
Bank Examiner
1
Deputy Comptroller
(Economics)
Deputy Comptroller
for New Charters
Deputy Comptroller
for
Mergers and Branches
Special Assistants
to the Comptroller
(Bank Examination)
Deputy
Administrative
Assistants
Director,
Bank Organization
Division
..
Special Assistant
to the Comptroller
(Public Affairs)
Special Assistant
to the Comptroller
(Congressional Affairs)
Special Counsel
to the
Comptroller
Chief Counsel
This Office is deeply indebted to the members of the advisory committees who have given so much of
their time and effort to provide a mutual exchange of information on matters of extreme importance to the
banking industry internationally, nationally, and on the regional level. This continuing review of bank
regulatory policies is a vital necessity with the rapid economic growth experienced in this country over the
past several years. These men bring to their work the best practical experience and native talent and truly
represent the manifold interests of the Nation's banking community. They continue to provide this Office
with the richest variety of viewpoint and an uncommonly high degree of sustained creativity.
THE NATIONAL ADVISORY COMMITTEE ON BANKING POLICIES AND PRACTICES
George S. Moore, Chairman
Robert C. Baker
Henry T. Bodman
George Champion
Kenton R. Cravens
Roger C. Damon
G. Morris Dorrance, Jr.
George S. Eccles
J. A. Elkins, Jr.
John S. Fangboner
Sam S. Fleming
Robert D. H. Harvey
William M. Jenkins
David M. Kennedy
Mills B. Lane, Jr.
Frederick G. Larkin, Jr.
Homer J. Livingston
John A. Mayer
Carl G. McCraw
Frank E. McKinney
J. E. Patrick
R. A. Peterson
Judge Edward J. Ruetz
W. Harry Schwarzschild, Jr.
Robert H. Stewart, III
Norfleet Turner
CONSULTING COMMITTEE OF BANK ECONOMISTS TO THE COMPTROLLER OF THE CURRENCY
William F. Butler, Chairman
John J. Balles
James M. Dawson
Walter E. Hoadley
Herbert E. Johnson
William J. Korsvik
LeifH. Olsen
Leslie C. Peacock
Eugene C. Zorn, Jr.
INVESTMENT SECURITIES ADVISORY COMMITTEE
John H. Perkins, Chairman
George E. Barnett
Alan K. Browne
Albert W. Gray
Lewis F. Lyne
Early F. Mitchell
Arthur H. Quinn, Jr.
Thomas L. Ray
Wesley G. Schelke
Franklin Stockbridge
William J. Wallace
James G. Wilson
ADVISORY COMMITTEE ON INTERNATIONAL BANKING AND FINANCE
Bentley G. McCloud, Jr., Chairman
Roger E. Anderson
Alfred W. Barth
Frederick Heldring
J. Warren Olmsted
W. Walter Phelps, Jr.
Roland Pierotti
Walter B. Wriston
COMMITTEE ON ACCOUNTING PRACTICES
C. H. Baumhefner, Chairman
Charles A. Agemian
Earl L. Bimson
G. Edward Cooper
Marion C. English
Joseph A. Hall, III
Franklin A. Gibbons, Jr.
J. Franklin Mellema
Bernard T. Stott
REGIONAL ADVISORY COMMITTEES ON BANKING POLICIES AND PRACTICES
REGION ONE
John Simmen, Chairman
H. L. Goodwin, Vice Chairman
Benjamin Blackford
James E. Chandler
Edward L. Clifford
Hubert H. Hauck
Joseph P. Healey
David C. Hewitt
William M. Lockwood
L. H. Martin
H. C. Owen, Jr.
Norman R. Vester
REGION TWO
Robert G. Cowan, Chairman
Walter M. Wilmshurst, Vice Chairman
34
D. Victor Bornn
Alvan B. Fehn
Elwood F. Kirkman
Horace G. Moeller
Kingsbury S. Nickerson
Prentice J. Rodgers
W. E. Roosevelt
E. Perry Spink
Richard H. Stover
Frederick Sundermann
REGION THREE
Malcolm E. Lambing, Chairman
Albert L. Rasmussen, Vice Chairman
Morris H. Baker
Wilbur A. Bankert
Charles H. Bracken
William B. Brosius
William G. Foulke
Russell E. Gardner
Robert Y. Garrett, Jr.
James B. Grieves
Frank E. Hemelright
George L. Morrison, Jr.
REGION FOUR
Fred A. Dowd, Chairman
L. L. Murphy, Vice Chairman
John W. Alford
Thomas G. Bartlett
O. T. Dorton
W. C. Laycock
LeRoy M. Miles
Wilson Mothershead
M. C. Oberhelman
Harland E. Paige
Deroy Scott
L. A. S toner
REGION FIVE
W. Wright Harrison, Chairman
William S. Jenkins, Vice Chairman
J. Phillips Coleman
Barnum L. Colton
S. Thomas Cox
D. Sterling Diddle
Paul Hinkle
Warren H. Lasher
Adrian L. McCardell
Archie W. McLean
H. H. Meyn
Walter J. O'Donnell
REGION SIX
James D. Robinson, Jr., Chairman
J. W. Blackmon
J. E. Bryan
W. A. Hobbs, Jr.
Elwood Johnson
Edward W. Lane, Jr.
Hugh C. Lane
W. W. McEachern
W. T. Maddox
G. E. Patterson
Godfrey Smith
REGION SEVEN
Roland A. Mewhort, Chairman
Leroy E. Liljedahl, Vice Chairman
John H. Crocker
J. C. Hauser
H. A. Jacobson
George L. Luthy
Harold Meidell
Charles Z. Meyer
William H. Patton
Harold J. Stoddard
D. P. Stone
P. R. Wilkinson
REGION EIGHT
W. W. Campbell, Chairman
Nat S. Rogers, Vice Chairman
Keehn W. Berry
Frank B. Caldwell
A. David Califf
John A. Hand
Earl L. McCarroll
Charles W. McCoy
Frank Plummer
Albert Rains
Walter W. Schroeder
H. S. Walters
REGION NINE
Joseph R. Hartz, Chairman
A. M. Eriksmoen, Vice Chairman
A. E. Dahl
Thomas P. Hudson
Ora G. Jones, Jr.
Richard J. Lewis
C. C. Lind
John A. Moorhead
Mrs. E. A. Nachtwey
Fred R. Orth
John M. Rose
C. Glenn Rye
REGION TEN
John B. Mitchell, Chairman
Charles Young, Vice Chairman
Calvin W. Aurand
Robert Bunten
Clarence Coleman
James B. Cooper
R. L. Kilgore
B. L. Lohmuller
Nation Meyer
Morris F. Miller
L. R. Reynolds, Jr.
Burnham Yates
REGION ELEVEN
T. C. Frost, Jr., Chairman
W, H. McDonald, Vice Chairman
James W. Aston
Oliver Howard
Joseph F. Irvin
F. G. McClintock
George G. Matkin
Ford Simmons
Leon Stone
William Thomas, Jr.
J. D. Wilkinson
Joe B. Wolverton
REGION TWELVE
Melvin J. Roberts, Chairman
Frank O. Papen, Vice Chairman
J. D. Ackerman
Robin B. Bailey
D. M. Crouse
W. M. Gallaway
Jackson F. King
H. A. McEvoy
R. K. Schumann
Roy W. Simmons
A. H. Trautwein
Robert D. Williams
REGION THIRTEEN
William E. Irvin, Chairman
Baker Ferguson, Vice Chairman
Maxwell Carlson
D. H. Cuddy
L. A. Frazier
Forrest C. Hedger
Theodore Jacobs
E. J. Kolar
C. Henri Labbe
James E. Phillips
John E. Tenge
Dewitt Wallace
REGION FOURTEEN
Ralph V. Arnold, Chairman
Dan E. Dorman, Vice Chairman
Charles de Bretteville
H. S. Gorman
Charles E. Harris
Alfred Hart
Joseph Rogers
M. A. Ruderman
Howard L. Sargent
Jacob Shemano
C. Arnholt Smith
George L. Woodford, Jr.
35
I X . Income and Expenses of the Office of the
Comptroller of the Currency
The health and growth of the National banking
system are reflected in the financial position of this
Office. During 1965, income exceeded expenses for
the fourth consecutive year, but net income was somewhat lower than in 1964.
A. Income for 1965
Several factors combined to increase total income in
1965 to $19,648,462, an increase of 9.6 percent over
1964. A $29 billion growth in total assets of National
banks raised income from assessments to $16.8 million,
or 86 percent of total income.
Other income categories remained at good levels.
Income from trust examinations and investigations
reached $1,326,829, an increase of $116,801 over 1964.
Income from investments in United States securities
increased to $520,679 for the year 1965. Income
from charter investigations declined by 47.6 percent
in 1965 to $131,523, the lowest figure for this category
in the past 3 years.
B. Expenses far 1965
Expenses in 1965 totaled $18.2 million, an increase
over 1964 of $1.9 million. Salary, travel and related
expenses aggregated 94.5 percent of the total.
Salaries and related payroll expenses alone increased
$1.5 million in 1965. Four primary cost factors contributed to this increase. First, the Congressional pay
raise effective in the fall of 1965 increased all employee's salaries. Second, the merit promotion plan
was in operation for its first full year. Third, the
regional counsel program has now placed trained attorneys in the 14 National bank regions. Through
this program, bankers and examiners are provided with local, readily-accessible counsel representing this Office. The implementation of this
program has required the hiring and training of more
attorneys for service in Washington and in the field.
Fourth, the great asset growth experienced in the National banking system, together with the increase in
the number of banking offices and the conversion of
several large banks, have made necessary an increase
36
in the number of examining personnel. During 1965,
the total number of employees of this Office increased
11 percent from 1,531 to 1,702. Total assets of National banks increased by 15.3 percent over 1964.
Thus, the increase in manpower strength has been held
slightly below work load growth as a result of an Officewide cost reduction program being effected through
streamlined techniques and a more efficient allocation
of manpower.
Despite the increase in total personnel, total per diem
expenses were held to a modest increase of 1.2 percent
above 1964. On the other hand, travel expenses increased significantly. Expanded personal communication between Washington, the regional offices, and
banks contributed to the increase in travel expenses.
Several savings were realized in 1965 through management improvement efforts. Partial completion of
the adaptation of internal fiscal procedures to automatic data processing accounted for an annual saving
in manpower costs of $73,000. Decentralization of
duties to the regional offices has saved 15 man-years
in 1965, with even larger annual savings projected for
ensuing years.
G. Comptroller's Equity
The equity account is in reality a reserve for contingencies. In sharp contrast with the unfavorable 195761 trend of substantial equity erosion, over $5 million
has been added to the equity position of this Office
since December 1961. The account reached a record
high of $6,728,854 in 1965.
D. Independent Audit
The audit staff of the Bureau of Accounts in the
Treasury Department conducted an independent audit
of the financial statements and supporting records of
the Office of the Comptroller of the Currency for calendar year 1965. The audit was made in accordance
with generally accepted auditing standards.
TABLE 14
Comparative statement of income and expenses of the Office of the Comptroller of the Currency, by calendar years 1959-65
1965
1964
1963
1962
1961
1960
1959
INCOME
Assessments
Trust examinations
Trust investigations
Branch investigations
Charter investigations
Merger and consolidation fees
Affiliate examinations.
Extra examinations
Reporting services
Manuals and publications
Currency issue management
Other
$16,804,599 $15,200,556 $14,245,418 $13,
1, 318, 148 1, 196, 574 1,077,018
8,681
13,454
16,090
201, 390
190,933
166, 962
131,523
250, 712
243,899
64, 500
46,000
47,500
3,494
4,759
4,362
0
2,498
2,850
506, 105
496, 330
466,120
29, 373
54, 760
212, 683
46, 916
34,125
32, 282
13, 054
5,658
2,588
Subtotal . . .
Investment income
Total
289, 291 $10, 686, 750 $10,213,494 $9,247,563
477, 364
540, 772
511,121
953,889
0
0
0
0
86,153
98, 183
100, 230
156, 116
25,469
31, 800
37, 732
108, 063
0
0
4,000
49,000
3,606
2,354
2,326
3,324
9,416
2,375
5,537
7,987
93,110
84,480
86, 768
238, 750
0
0
0
0
0
0
0
0
3,011
966
2,303
4,222
19, 127, 783 17,496,359 16,517,772 14,810,642 11,436,767
520, 679
353, 113
430, 567
169, 865
172, 106
10, 974,424 9, 945, 692
155,651
216,414
19, 648,462 17,926,926 16,870, 885 14, 982, 748 11,606,632
11, 190,838 10,101,343
EXPENSES
Salaries
Employer's retirement, insurance
and F.I.C.A. contribution
Per diem or subsistence
Travel
Rent
Supplies
Printing, books, and periodicals
Furniture and fixtures
Depreciation
Remodeling....
Office machines, rentals, and repairs
Communications
Shipping expenses
Other
Total
Net income*
13,063,302 11,658, 110 10, 900, 824
9,490, 714
8, 527, 136
8, 192, 979 7,511,943
975, 880
1, 968, 860
1,171,948
216, 529
91,475
245, 245
0
58,476
34,003
874, 263
1, 945, 213
916, 573
186,462
65,284
311, 129
818, 243
2,402, 914
866, 591
190,477
76, 869
303, 506
712, 535
2, 174,488
708, 776
180,069
71,806
111,272
205, 930
645, 641
1, 841,168
654, 657
162,837
30,544
84,418
31,324
581,450
509, 768
1, 684, 544 1, 590, 753
557,062
577, 362
153, 333
157,496
27, 539
27,268
75, 908
85,562
26, 864
42, 733
48,567
19, 663
31,617
69, 094
69,499
145, 039
47,014
100,913
26, 868
128, 558
35,097
64,336
13, 492
118,658
53, 106
69,933
118,304
55, 559
80,662
74,449
19, 346
38,904
18, 188, 183 16, 280, 123 15, 915, 324 13,910, 115 12,110,424
1,460, 274
1, 646, 803
955, 561
1,072, 633
(503, 792)
74, 284
24,814
49,411
72, 820
21, 379
37, 681
11,497,903 10,585,050
(307,065)
(483, 707)
•Excludes the nonrecurring charge for 1965 of $4,736 representing adjustment in capitalization of fixed assets due to completed
valuation.
37
TABLE 15
Comparative statement of financial condition of the Office of the Comptroller of the Currency, by calendar years 1959—65
1965
1964
1963
1962
1961
1960
1959
ASSETS
Current assets:
Cash on hand and on deposit. . . $194, 068
36, 287
Accounts receivable
9, 997, 821
Investments
110,393
Accrued interest receivable
10,215
Prepaid expenses
$603, 988
11,885
8,571,481
88, 715
10,646
$350, 295 $1, 225, 955
125,454
89, 912
7,139,008 5, 542,450
83,018
30,479
4,716
527
$812, 139
47, 148
4, 748, 866
24, 543
2,404
$957, 281
45, 715
5, 098, 809
56, 047
4,441
10, 348, 784
9,286,715
7, 702,491
6, 889, 323
5, 635, 100
6, 162, 293
6, 293, 922
665, 368
145,017
524, 621
90,481
426,475
41,914
0
0
0
0
0
0
0
0
Total current assets
Fixed assets:
Furniture, fixtures, and equipment
Less: accumulated depreciation.
Total fixed assets
Total assets
$1, 125,
57,
5, 035,
75,
864
826
126
106
0
520, 351
434, 140
384, 561
0
0
0
0
10,869, 135
9, 720, 855
8, 087, 052
6, 889, 323
5, 635, 100
6, 162, 293
6, 293, 922
35, 591
0
390
435, 509
117,961
314,611
119,209
260, 959
49, 000
179,732
41, 760
175,690
43, 157
123, 008
56, 981
237,500
10, 668
43, 937
209,000
10, 202
38, 554
209, 527
6,154
38, 161
190, 268
0
31, 557
215, 000
0
44,473
191, 636
0
45, 317
165,000
0
340, 740
699,038
686, 807
608, 597
475, 289
453, 559
376,482
2, 697, 942
2, 702, 902
2, 687, 754
2, 692, 094
2, 695, 165
2, 648, 206
1, 050, 564
1, 070, 836
1,117,659
1, 062, 940
1, 105, 000
1, 054,000
3, 799, 541
3, 748, 506
3, 773, 738
3,805,413
3, 755, 034
3, 800, 165
3, 702,206
4, 140, 281
4, 447, 544
4,460, 545
4, 414, 010
4, 230, 323
4, 253, 724
4,078, 688
6, 728, 854
5,273,311
3, 626, 507
2,475,313
1,404, 777
1, 908, 569
2, 215, 234
10, 869, 135
9, 720, 855
8, 087, 052
6, 889, 323
5, 635, 100
6, 162, 293
6, 293, 922
LIABILITIES
Current liabilities:
Accounts payable
Accrued payroll
Payroll deductions for bonds
and taxes, etc
Accrued travel expenses
Deferred income
Total current liabilities
Other liabilities:
Closed receivership trust funds. . 2, 697, 579
Employees, accumulated annual
1, 101, 962
leave. .
Total other liabilities
Total liabilities
Equity:
Comptroller's equity
Total liabilities and equity
X . Issue and Redemption of Currency
During the year ending December 31, 1965, the
Comptroller made 1,213 shipments of new Federal
Reserve notes (1,995,740,192 notes with an aggregate
value of $10,820,401,920) to Federal Reserve agents.
Delivery of 50,764,000 notes with an aggregate value
of $342,528,000 was made to the Treasurer of the
United States. There were 4,856 shipments of unfit
Federal Reserve notes and Federal Reserve bank notes
(635,244,225 notes with an aggregate value of
$7,023,456,240) received for verification and certifi-
38
cation for destruction; 1,862,763 badly damaged Federal Reserve notes and Federal Reserve bank notes
with an aggregate value of $9,140,023 were presented
by the Treasurer of the United States for identification
approval.
The Comptroller also received shipments of National
bank notes (30,011^4 notes with an aggregate value
of $590,563.50) for verification and destruction. On
December 31, 1965, the value of National bank notes
outstanding was $22,006,929.50.
APPENDIX A
Merger Decisions, 1965
INDEX
Merger1 Decisions, 1965
The First National Exchange Bank of Clayton, Clayton,
N.Y. (5108), and the National Bank of Northern New
York, Watertown, N.Y. (2657), which had merged Jan.
15, 1965, under charter and title of the latter bank
(2657)
The Fort Mclntosh National Bank of Beaver, Beaver,
Pa. (8185), and Western Pennsylvania National Bank,
McKeesport, Pa. (2222), which had merged Jan. 15,
1965, under charter and title of the latter bank (2222).
Citizens State Bank, Arlington, Wash., was purchased
Jan. 22, 1965, by Seattle-First National Bank, Seattle,
Wash. (11280)
The First National Bank & Trust Co. of Ramsey,
Ramsey, NJ. (9367), and Citizens First National
Bank of Ridgewood, Ridgewood, N. J.(11759), which
had merged Jan. 29, 1965, under charter and title of
the latter bank (11759)
The Bank of Glade Spring, Glade Spring, Va., and
Virginia National Bank, Norfolk, Va. (9885), which
had merged Jan. 29, 1965, under charter and title of
the latter bank (9885)
First State Bank of Hoagland, Hoagland, Ind., and
Lincoln National Bank & Trust Co. of Fort Wayne,
Fort Wayne, Ind. (7725), which had merged Jan. 30,
1965, under the charter and title of the latter bank
(7725)
The First National Bank of Milton, Milton, N.Y.
(11649), and the First National Bank of Highland,
Highland, N.Y. (5336), which had consolidated Feb.
11, 1965, under charter and title of the latter bank
(5336)
The Hop Bottom National Bank, Hop Bottom, Pa.
(9647), and the First National Bank of Hallstead,
Hallstead, Pa. (7702), which had merged Feb. 19,
1965, under charter of the latter bank (7702) and
under title of "Peoples National Bank of Susquehanna
County."
The Farmers' National Bank of McAlisterville, McAlisterville, Pa. (9526), with the First National Bank of
Port Royal, Port Royal, Pa. (11369), the Port Royal
National Bank, Port Royal, Pa. (11373), and the
Juniata Valley National Bank, Mifflintown, Pa. (5147),
which had merged Feb. 20, 1965, under charter and
title of the latter bank (5147)
First National Bank of South Gate, South Gate, Calif.
(14899), and City National Bank, Beverly Hills, Calif.
(14695), which had merged Feb. 26, 1965, under
charter and title of the latter bank (14695)
The Birmingham National Bank, Derby, Conn. (1098),
and Home National Bank of Derby, Derby, Conn.
(15487), and the Second National Bank of New
Haven, New Haven, Conn. (227), which had merged
Feb. 26, 1965, under charter and title of the latter
bank (227)
The Hollister National Bank, Hollister, Calif. (13510),
and the Bank of California, National Association,
San Francisco, Calif. (9655), which had merged Mar.
12, 1965, under charter and title of the latter bank
(9655)
1
Page
43
44
45
46
47
48
50
51
51
53
54
55
Includes mergers, consolidations, and purchase and sale
transactions where the emerging bank is a National bank.
Decisions are arranged chronologically by effective date.
40
The Peoples National Bank of Lexington, Lexington,
Va. (7173), and the First National Exchange Bank of
Virginia, Roanoke, Va. (2737), which had merged
Mar. 17, 1965, under charter and title of the latter
bank (2737)
Tryon Bank & Trust Co., Tryon, N.C., and North
Carolina National Bank, Charlotte, N.C. (13761),
which had merged Mar. 22, 1965, under the charter
and title of the latter bank (13761)
The Live Stock National Bank in Chicago, Chicago, 111.
(13674), and Central National Bank in Chicago,
Chicago, 111. (14362), which had merged Mar. 26,
1965, under the charter and title of the latter bank
(14362)
The Central Bank of Howard County, Clarksville, Md.,
and the Citizens National Bank of Laurel, Laurel, Md.
(4364), which had merged Mar. 31, 1965, under the
charter of the latter bank (4364) and under title
"The Citizens National Bank."
Guaranty Bank, Torrance, Calif., and City National
Bank, Beverly Hills, Calif. (14695), which had merged
Apr. 2, 1965, under charter and title of the latter bank
(14695)
The Farmers Bank & Trust Co., Rockingham, N.C,
and Southern National Bank of North Carolina,
Lumberton, N.C. (10610), which had merged Apr. 3,
1965, under charter and title of the latter bank
(10610)
The First State Bank of Covington, Covington, Tex.,
was purchased Apr. 5, 1965, by the First National
Bank of Itasca, Itasca, Tex. (4461)
The South Omaha Bank, Omaha, Nebr., was purchased
Apr. 7, 1965, by Stock Yards National Bank of South
Omaha, Nebr. (9908)
The Leonia Bank & Trust Co., Leonia, N.J., and
Citizens National Bank of Englewood, Englewood,
NJ. (4365), which had merged Apr. 9, 1965, under
the charter of Citizens National Bank of Englewood
(4365) and under title of "Citizens National Bank.". .
First National Bank of Gate City, Gate City, Va.
(13502), and Virginia National Bank, Norfolk, Va.
(9885), which had merged Apr. 9, 1965, under charter
and title of the latter bank (9885)
The Peoples National Bank of Farmville, Farmville, Va.
(9222), and Virginia National Bank, Norfolk, Va.
(9885), which had merged Apr. 9, 1965, under the
charter and title of the latter bank (9885)
Orange Empire National Bank, Anaheim, Calif. (15361),
was purchased Apr. 12, 1965, by the United States
National Bank, San Diego, Calif. (10391)
Central National Bank of Washingtonville, Washingtonville, N.Y. (13913), and County National Bank,
Middletown, N.Y. (13956), which had merged Apr.
23, 1965, under charter and title of the latter bank
(13956)
Bank of Millvale, Millvale, Pa., and Western Pennsylvania National Bank, Pittsburgh, Pa. (2222), which
had merged Apr. 23, 1965, under charter and title of
the latter bank (2222)
Dunkirk Trust Co., Dunkirk, N.Y., and Liberty National
Bank & Trust Co., Buffalo, N.Y. (15080), which had
merged Apr. 27, 1965, under charter and title of the
latter bank (15080)
57
58
60
61
62
63
64
65
66
67
68
69
70
71
72
Page
The Farmers Bank, Sunbury, Ohio, and the First
National Bank of Delaware, Delaware, Ohio (243),
which had merged Apr. 30, 1965, under charter and
title of the latter bank (243)
Central State Bank, Dalton Pa., and the First National
Bank of Carbondale, Carbondale, Pa. (664), which had
merged Apr. 30, 1965, under charter of the latter bank
(664), and under the title of "First National Bank,
Carbondale, Pennsylvania."
Forty Fort State Bank, Forty Fort, Pa., was purchased
Apr. 30, 1965, by Miners National Bank of WilkesBarre, Wilkes-Barre, Pa. (13852)
Shirlington Trust Co., Inc., Arlington, Va., and First &
Citizens National Bank of Alexandria, Alexandria, Va.
(651), which had merged May 3, 1965, under charter
of the latter bank (651), and under title "First &
Citizens National Bank."
The National Shawmut Bank of Boston, Boston, Mass.
(5155), and Congress National Bank of Boston, Boston,
Mass. (15509), which had consolidated May 6, 1965,
under charter of the latter bank (15509) and under
title "The National Shawmut Bank of Boston."
Canal National Bank, Portland, Maine (941), and the
Bath National Bank, Bath, Maine (494), which had
consolidated May 14, 1965, under the charter and
title of "Canal National Bank."
Martin State Bank, Martin, Mich., was purchased
May 22, 1965, by the First National Bank & Trust Co.
of Kalamazoo, Kalamazoo, Mich. (191)
The Sandborn Banking Co., Sandborn, Ind., and the
American National Bank of Vincennes, Vincennes,
Ind. (3864), which had merged May 26, 1965, under
the charter and title of the latter bank
The Home State Bank of Lawrence, Lawrence, Mich.,
was purchased June 1, 1965, by the American National Bank & Trust Co. of Kalamazoo, Kalamazoo,
Mich. (13820)
The Bank of Basil Co., Baltimore, Ohio, was purchased
June 5, 1965, by the Fairfield National Bank of
Lancaster, Lancaster, Ohio (7517)
The Rossford Savings Bank, Rossford, Ohio, and the
National Bank of Toledo, Toledo, Ohio (14586), which
had merged June 7, 1965, under charter of the latter
bank (14586), and under title of "First National Bank
of Toledo."
The National Bank of Sanford, Sanford, N.C. (13791),
and Southern National Bank of North Carolina,
Lumberton, N.C. (10610), which had merged June 12,
1965, under charter and title of the latter bank
(10610)
The First National Bank of Petersburg, Petersburg, Pa.
(10313), and Union National Bank & Trust Co. of
Huntingdon, Huntingdon, Pa. (4965), which had
merged June 16, 1965, under charter and title of the
latter bank (4965)
County National Bank of Long Island, Mineola, N.Y.
(14951), and Valley National Bank of Long Island,
Valley Stream, N.Y. (11881), which had merged
June 21, 1965, under charter and title of the latter
bank (11881)
The First National Bank of Highland Park, Highland
Park, NJ. (12598), and First Bank & Trust Co.,
National Association, Fords, NJ. (15255), which had
consolidated June 25, 1965, under charter and title
of the latter bank (15255)
The Citizens Trust Co. of Schenectady, Schenectady,
N.Y., and National Commercial Bank & Trust Co.,
Albany, N.Y. (1301), which had merged June 25,
1965, under charter and title of the latter bank
(1301)
First National Bank of Leland, Leland, Miss. (15215),
and the Commercial National Bank of Greenville,
Greenville, Miss. (13403), which had merged July 2,
1965, under charter and title of the latter bank
(13403)
73
75
76
77
78
80
81
82
83
84
85
86
87
88
88
90
91
The First National Bank of Appalachia, Appalachia,
Va. (9379), and the First National Exchange Bank
of Virginia, Roanoke, Va. (2737), which had merged
July 9, 1965, under charter and title of the latter bank
(2737)
Security Trust Co., St. Louis, Mo., and Mercantile
Trust Co., National Association, St. Louis, Mo.
(15452), which had merged July 14, 1965, under
charter and title of the latter bank (15452)
Avalon Bank, Avalon, Pa., was purchased July 16,
1965, by Western Pennsylvania National Bank,
Pittsburgh, Pa. (2222)
Bank of Giles County, Pearisburg, Va., and the First
National Exchange Bank of Virginia, Roanoke, Va.
(2737), which had merged July 16, 1965, under charter
and title of the latter bank (2737)
Central Bank National Association, Tacoma, Wash.
(15447), was purchased July 28, 1965, by Peoples
National Bank of Washington, Seattle, Wash.
(14394)
The National Deposit Bank of Arnold, Arnold, Pa.
(11896), and Western Pennsylvania National Bank,
Pittsburgh, Pa. (2222), which had merged July 29,1965,
under charter and title of the latter bank (2222)
Pacific State Bank, Hawthorne, Calif., and United
States National Bank, San Diego, Calif. (10391),
which had merged July 30, 1965, under charter and
title of the latter bank (10391)
The First National Bank & Trust Co. of Schuylkill
Haven, Schuylkill Haven, Pa. (5216), and Pennsylvania National Bank & Trust Co., Pottsville, Pa.
(1663), which had merged July 30, 1965, under
charter and title of the latter bank (1663)
First National Bank of Long Beach, Long Beach, Calif.
(14632), and the Bank of California, National
Association, San Francisco, Calif. (9655), which had
merged July 31, 1965, under charter and title of the
latter bank (9655)
The Union City National Bank, Union City, Mich.
(1826), was purchased Aug. 31, 1965, by the Southern
Michigan National Bank of Coldwater, Coldwater,
Mich. (1924)
The Loudoun National Bank of Leesburg, Leesburg,
Va. (1738), and First & Merchants National Bank,
Richmond, Va. (1111), which had merged Aug. 31,
1965, under charter and title of the latter bank
(1111)
St. Paul National Bank, St. Paul, Va. (8547), and the
First National Exchange Bank of Virginia, Roanoke,
Va. (2737), which had merged Sept. 14, 1965, under
charter and title of the latter bank (2737)
The Bank of Glasgow, Inc., Glasgow, Va., and the First
National Exchange Bank of Virginia, Roanoke, Va.
(2737), which had merged Sept. 14, 1965, under
charter and title of the latter bank (2737)
Stanwood State Savings Bank, Stanwood, Mich., and
First National Bank of Big Rapids, Big Rapids, Mich.
(14881), which had merged Sept. 30, 1965, under
charter and title of the latter bank (14881)
The First National Bank of Blackstone, Blackstone, Va.
(9224), and the Fidelity National Bank, Lynchburg,
Va. (1522), which had merged Sept. 30, 1965, under
charter and title of the latter bank (1522)
Wilshire National Bank, Los Angeles, Calif. (14997),
and Heritage National Bank, Los Angeles, Calif.
(15463), which had merged Oct. 15, 1965, under
charter of the latter bank (15463) and under title of
"Heritage-Wilshire National Bank."
The First National Bank of Alexandria, Alexandria, Pa.
(11263), and First-Grange National Bank of Huntingdon, Huntingdon, Pa. (31), which had merged Oct. 30,
1965, under charter and title of the latter bank (31)..
Commonwealth Bank, Los Angeles, Calif., and City
National Bank, Beverly Hills, Calif. (14695), which
had merged Nov. 2, 1965, under charter and title of
the latter bank (14695)
92
93
104
105
106
107
108
109
HO
112
113
114
115
116
117
118
119
120
41
Page
Citizens First National Bank of Frankfort, Frankfort,
N.Y. (10351) and the Oneida National Bank & Trust
Go. of Central New York, Utica, N.Y. (1392), which
had merged Nov. 5, 1965, under charter and title of
the latter bank (1392)
121
Bank of Phoebus, Hampton, Va., and Virginia National
Bank, Norfolk, Va. (9885), which had merged Nov. 5,
1965, under charter and title of the latter bank (9885). 123
The Merchants' National Bank of Hampton, Hampton,
Va. (6778), and Virginia National Bank, Norfolk, Va.
(9885), which had merged Nov. 5, 1965, under charter
and title of the latter bank (9885)
124
Patrick County Bank, Stuart, Va., and the First National
Bank of Martinsville and Henry County, Martinsville,
Va. (7206), which had merged Nov. 6, 1965, under
charter and title of the latter bank (7206)
125
Century Bank of Chicago, Chicago, 111., was purchased
Nov. 19, 1965, by the National City Bank in Chicago,
Chicago, 111. (14562)
127
The Sharon Center Banking Co., Sharon Center, Ohio,
and the Old Phoenix National Bank of Medina,
Medina, Ohio (4842), which had merged Nov. 27,
1965, under charter and title of the latter bank (4842). 127
The Bank of Lexington, Lexington, S.C., and the First
Commercial National Bank of South Carolina,
Columbia, S.C. (13720), which had merged Dec. 10,
1965, under the charter of the latter bank (13720), and
with title of "The First National Bank of South
Carolina."
128
United States National Bank in Johnstown, Pa. (13781),
and Cambria County National Bank, Carrolltown,
Carrolltown, Pa. (5855), which had consolidated Dec.
11, 1965, under charter and title of the former bank
(13781)
130
42
Page
The Citizens National Bank in West Milton, West
Milton, Ohio (14264), and the First Troy National
Bank & Trust Co., Troy, Ohio (3825), which had
merged Dec. 15, 1965, under charter of the latter
bank (3825) and under title of "The First National
Bank and Trust Co."
Douglas County State Bank, Roseburg, Or eg., and
First National Bank of Oregon, Portland, Oreg.
(1553), which had merged Dec. 22, 1965, under
charter and title of the latter bank (1553)
Bank of Los Angeles, Los Angeles, Calif., and United
States National Bank, San Diego, Calif. (10391), which
had merged Dec. 29, 1965, under charter and title of
the latter bank (10391)
The First National Bank of Whippany, Whippany,
NJ. (13173), and the First National Iron Bank of Morristown, Morristown, NJ., (1113), which had merged
Dec. 30, 1965, under the charter of the latter bank
(1113), and with title of "The First National Iron
Bank of New Jersey."
Metamora State Savings Bank, Metamora, Mich., and
the First National Bank of Lapeer,Lapeer, Mich.
(1731), which had merged Dec. 31, 1965, under
charter and title of the latter bank (1731)
First National Bank of Boone, Boone, N.C. (15116), and
First National Bank of Eastern North Carolina,
Jacksonville, N.C. (14676), which had merged Dec.
31, 1965, under charter and title of the latter bank
(14676)
The Peoples Savings Bank of Greenville, Ohio, Greenville, Ohio, and the Second National Bank of Greenville, Greenville, Ohio (2992), which had merged Dec.
31, 1965, under charter of the latter bank (2992) and
under title of "The Second National Bank of Greenville, Greenville, Ohio."
131
132
134
135
136
137
139
THE FIRST NATIONAL EXCHANGE BANK OF CLAYTON, CLAYTON, N.Y., AND THE NATIONAL BANK OF NORTHERN
NEW YORK, WATERTOWN, N.Y.
Name of bank and type of transaction
Total assets
Banking offices
In operation To be operated
The First National Exchange Bank of Clayton, Clayton, N.Y. (5108), with
and the National Bank of Northern New York, Watertown, N.Y. (2657),
which had
merged Jan. 15, 1965, under charter and title of the latter bank (2657). The
merged bank at the date of merger had
COMPTROLLER'S DECISION
On November 2, 1964, the $52.8 million National
Bank of Northern New York, Watertown, N.Y., and
the $4.7 million First National Exchange Bank of
Clayton, Clayton, N.Y., applied to the Comptroller
of the Currency for permission to merge under the
charter and title of the former.
Watertown, which has a population in excess of
33,000, is located in north-central New York 80 miles
northwest of Utica and 10 miles east of Lake Ontario.
The town has shown considerable growth in industrial
development in recent years with a diverse group of
manufacturers now present in the community. It
serves, in addition, a large portion of the north-central
region of the State which is mainly an agricultural,
dairy, and resort area. It is also the commercial and
financial center for this upstate region.
Clayton, with a population of 2,000 persons, is
located in the Thousand Islands on the St. Lawrence
River 23 miles north of Watertown. Although the
surrounding area is devoted chiefly to dairy farming,
summer resort and recreational facilities play a large
role in the local economy. Economic growth in the
community should be spurred by completion of the
final segment of a limited access interstate highway
running from Canada through New York and Pennsylvania to western Maryland with access provided for
Clayton, Watertown, and Syracuse.
While the single office merging bank has been operated soundly, its growth, and its consequent impact
on the community economy, has been limited by conservative and unaggressive management. In addition,
a succession problem due to the age of the operating
officers has reached a critical point so that some provision for adequate future banking in the community
must be made. Merger with the charter bank, a pro-
$4, 502,422
1
54, 740,086
6
59, 242,508
7
gressive, full-service institution, will alleviate the succession problem and better serve the convenience and
needs of the community.
The regional banking structure, comprised of the
charter bank and one other relatively large bank, as
well as six smaller ones, should be strengthened by
consummation of the proposed merger. Due to the
local nature of their business, none of the small banks
near Clayton compete significantly with each other.
Consequently, they will remain unaffected by substitution of a branch of the charter bank. The new branch,
however, will enable the charter bank to compete more
effectively with the larger institution, the Marine Midland Trust Co. of Northern New York, in providing
full service, progressive banking for the north-central
New York region.
Applying the statutory criteria to this application,
we conclude that it is in the public interest and the application is, therefore, approved.
JANUARY 11, 1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
Commercial banking in the Watertown, N.Y., area
is already highly concentrated. Two banks, the
Marine Midland Trust Co. of Northern New York
and the National Bank of Northern New York, the
acquiring bank herein, account for about 90 percent
of the bank loans and deposits in the area. Six
banks presently compete with these comparative giants.
The elimination of one of the six smaller banks by
merger into one of the two large banks serves to increase this extraordinary degree of concentration and
aggravate the competitive difficulties of the remaining
five.
Therefore, the effect of the proposed consolidation
upon competition must be deemed to be adverse.
43
T H E FORT MCINTOSH NATIONAL BANK OF BEAVER, BEAVER, P A . , AND WESTERN PENNSYLVANIA NATIONAL BANK,
MCKEESPORT, P A .
Banking offices
Name of bank and type of transaction
Total assets
In operation
The Fort McIntosh National Bank of Beaver, Beaver, Pa. (8185), with
and Western Pennsylvania National Bank, McKeesport, Pa. (2222), which
had
merged Jan. 15,1965, under charter and title of the latter bank (2222). The
merged bank at the date of merger had
COMPTROLLER'S DECISION
On November 13, 1964, the $543.5 million Western
Pennsylvania National Bank, McKeesport, Pa., and
the $4.4 million Fort McIntosh National Bank of
Beaver, Beaver, Pa., applied to the Comptroller of
the Currency for permission to merge under the charter
and with the title of the former.
McKeesport, a city of 46,000, is situated 11 miles
southeast of Pittsburgh in Allegheny County and is
considered part of the Pittsburgh standard metropolitan area, a highly industrialized region with the
principal industries being iron, steel, and related lines.
Beaver, the county seat of Beaver County, is located
29 miles northwest of McKeesport. Although basically a residential community of 6,160 persons representing the county's higher income families, Beaver
supports a Westinghouse Corp. plant employing 1,800
people. Other residents commute to work throughout the Greater Pittsburgh area.
The Western Pennsylvania National Bank has 48
branches, of which 37 are situated in Allegheny County,
6 in Washington County, 2 in Westmoreland County,
and 3 in Beaver County. The charter bank ranks third
in size in the Pittsburgh metropolitan area behind the
Mellon National Bank & Trust Co. and the Pittsburgh
National Bank. The Fort McIntosh National Bank
is the smaller of the two banks in Beaver and maintains no branches.
Consummation of this merger will neither alter the
charter bank's competitive position in the framework
of the Pittsburgh metropolitan area's banking structure nor will it eliminate any significant competition
between the applicants since the charter bank's branch
nearest to Beaver is more than 3 miles away across
the Beaver River. The merger will introduce a new
competitive element into Beaver. The $32.6 million
Beaver Trust Co., the other bank in Beaver, which
has shown an impressive record of growth under aggressive management, should continue to thrive not44
$4, 537, 524
1
556, 018, 962
51
To be operated
570, 556,486
52
withstanding the increased competition that may result
from a branch of the charter bank.
Besides increasing competition, this merger should
improve the banking service available in the Beaver
community. Operation of the merging bank as a
branch of the merged institution will provide stronger,
more efficient banking services and sufficient capital
resources to meet the growing credit needs of the
Beaver area. In addition, the new branch will offer
trust services through the experienced trust department of the charter bank.
Applying the statutory criteria to the proposal, we
conclude that it is in the public interest and the application is, therefore, approved.
JANUARY 12,
1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
Western Pennsylvania National Bank is the third
largest bank in the Pittsburgh area (Allegheny
County), accounting for approximately 10 percent of
the commercial banking business therein. This area
has for many years been characterized by an unusually
high degree of concentration in commercial banking,
the result to a large extent of a great many mergers and
acquisitions by and among the leading banks. The top
three banks currently account for approximately 85
percent of total Allegheny County deposits and loans
while the top four account for approximately 93 percent. The remaining deposits and loans are shared by
19 banks.
Western itself has been an extremely active participant in the consolidation movement having since
1953 acquired 22 small and medium-sized banks in
Allegheny County and the adjoining counties of Westmoreland, Washington, and Beaver. The instant proposal is Western's fourth merger in Beaver County in
less than a year. With Mellon National Bank & Trust
Co. and Pittsburgh National Bank, the two largest
banks, having acquired or opened branches through-
out the counties adjoining Allegheny and with Western acquiring formerly independent banks in generally
the same localities, the dominance enjoyed by these
three banks is being extended throughout the broader
four-county area constituting "Greater Pittsburgh."
It does not appear that any significant competition
exists between Western and Fort Mclntosh National
Bank. However, the Beaver Trust Co. and the Freedom National Bank will suddenly be faced with competition from a branch of a bank many times their
size. Western has not presented any overriding rea-
sons why it should enter Beaver by acquisition rather
than by establishing its own branch. The continuing
elimination of independent banks from Beaver County
and the rest of the Greater Pittsburgh area does not
seem necessary or justified, particularly when de novo
branching, which appears possible, would increase
rather than restrict alternative sources of banking
service.
We, therefore, believe that approval of this merger
will have an adverse effect on competition in the
Greater Pittsburgh area, especially Beaver County.
* * *
CITIZENS STATE BANK, ARLINGTON, WASH., AND SEATTLE-FIRST NATIONAL BANK, SEATTLE, WASH.
Banking offices
Name of bank and type of transaction
Total assets
In operation To be operated
Citizens State Bank, Arlington, Wash., with
was purchased Jan. 22, 1965, by Seattle-First National Bank, Seattle, Wash.
(11280), which had
After the purchase was effected, the receiving bank had
$5,217,000
1
1,219,690,000
1, 224, 907, 000
*115
116
•Including 2 facilities.
COMPTROLLER'S DECISION
On October 1, 1964, the $1,299 million Seattle-First
National Bank, Seattle, Wash., applied to the Comptroller of the Currency for permission to purchase
the assets and assume the liabilities of the $5.2 million
Citizens State Bank, Arlington, Wash.
Seattle, with a present estimated population in excess of 560,000, is the largest city in the State and the
center of an urban area numbering about 1 million inhabitants. The city is primarily a manufacturing center dependent chiefly on the aircraft and aerospace
industry, with shipbuilding, transportation, lumbering, food processing and extensive port facilities providing some diversification and stability.
Arlington, located about 47 miles north of Seattle,
has a population of 2,200 with an additional 7,500 in
its immediate trade area. The local economy depends
upon dairy farming, logging, and general agriculture.
The purchasing bank maintains 117 offices throughout the State, although the majority of these are concentrated in the Seattle-Puget Sound area. The bank
offers all of the services of a progressive statewide
banking institution catering to the specialized requirements of industry, agriculture, lumbering, and fishing.
As the largest commercial bank in the State, it competes chiefly with the $689 million National Bank of
Commerce of Seattle operating 79 offices throughout
the State; the $278 million Peoples National Bank of
Washington, Seattle, with 34 offices throughout the
State; the $202 million Old National Bank of Washington, Spokane, with 31 offices; the $251 million National Bank of Washington, Tacoma, with 32 offices;
and the $433 million Washington & Mutual Savings
Bank, operating 12 offices.
The single office selling bank is the only bank in
Arlington. The bank has experienced steady growth,
but is presently confronted with a management succession problem occasioned by the senior officer's desire to
withdraw from banking in the near future and by the
death of one of the bank's other senior officers.
In addition to solving the selling bank's management
problem, consummation of the proposed transaction
will result in greater operating efficiency and the introduction of a complete line of banking services offered by a modern diversified banking institution.
Although a small independent bank will disappear as
a result of the purchase, no adverse effect on competition can be foreseen. The very slight increase in total
assets of the purchasing bank will not affect the competitive banking picture in the Seattle-Puget Sound
region. No competition between the parties to this
transaction will be eliminated. The public in the selling bank's service area will continue to have access to
competitive banks around Arlington. It should also
45
be noted that an application to incorporate a new
State bank in Arlington has been filed with the State
Division of Banking.
Applying the statutory criteria to this proposal, this
application is hereby approved.
JANUARY 13, 1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
As of June 30, 1964, Citizens State was reported
to have total assets of $5,238,000, total deposits of
$4,450,000 and gross loans and discounts of $2,528,000.
As of the same date Seattle-First National was reported
to have total assets of $1,298,979,000, total deposits
of $1,161,327,000 and gross loans and discounts of
$679,915,000.
Seattle-First National is the largest bank in the State
of Washington (main office in Seattle, 117 branches
scattered statewide). However, its acquisitions of
other banks in 1959, 1960, and 1961 have not been
significantly deleterious to competition and its acquisition program has not contributed markedly to concentration of banking power within the State. If
anything, Seattle-First National has lagged in matching average increases of deposits and loans of com-
mercial and mutual savings banks within the State.
Its ratio of control of deposits and loans of commercial
and mutual savangs banks has decreased over the years,
and would still be below 1956 levels even after its
proposed acquisition of Citizens State.
Seattle-First National's acquisition of Citizens State,
the only bank in Arlington, Wash., a small community
of 2,165 persons in the northwest section of the State,
50 miles due north of Seattle, would mean the substitution of one bank for another, offering the community improved banking services over what it had
enjoyed in the past. After the acquisition, there
would remain 8 other banks within a radius of roughly
20 miles of Arlington. The probable competitive
impact of the imposition of a bank of the size of
Citizens State upon these banks is difficult to predict;
however, it would appear to be clear that their competitive position would not be improved.
Close ties in stock ownership and management,
moreover, already exist between Citizens State and
Seattle-First National. The acquisition, it would
seem, would only serve to emphasize these ties in
different form.
No significant anticompetitive effects, therefore, are
discernible from the proposed acquisition.
THE FIRST NATIONAL BANK & TRUST CO. OF RAMSEY, RAMSEY, N J., AND CITIZENS FIRST NATIONAL BANK OF
RlDGEWOOD, RlDGEWOOD, N . J .
Banking offices
Total assets
Name of bank and type of transaction
In operation
The First National Bank & Trust Co. of Ramsey, Ramsey, N.J. (9367), with
and Citizens First National Bank of Ridgewood, Ridgewood, N.J. (11759),
which h a d . . . .
merged Jan. 29, 1965, under charter and title of the latter bank (11759). The
merged bank at the date of merger had
COMPTROLLER'S DECISION
On November 11, 1964, the $77.8 million Citizens
First National Bank of Ridgewood, Ridgewood, N.J.,
and the $14.5 million First National Bank & Trust Co.,
Ramsey, N.J., applied to the Comptroller of the
Currency for permission to merge under the charter
and title of the former.
The applicant banks are located in the north-central
section of Bergen County, which is bounded on the
east by the Hudson River and on the north by New
York's Rockland County. Ridgewood, the site of
charter bank's home office, is basically a residential
community with a population of approximately 28,600,
46
$13, 770, 090
2
79, 141,623
6
92,911,713
To be operated
8
many of whom are employed in the Greater New York
City area. The charter bank presently operates four
branches, all in communities within 5 miles of Ridgewood, and has received approval to open a fifth
branch.
Ramsey, also almost entirely residential and with
a population of about 10,000, is the site of the merging bank's home office and is about 6 miles north of
Ridgewood. Industrial activity is anticipated to increase since an aggregate of 19 acres has been recently
zoned for industry in Ramsey and the adjoining community of Upper Saddle River. The merging bank
operates its only branch in Mahwah, a small town of
3,500 about 3 miles north of Ramsey.
The service areas of the two banks are primarily
residential and overlap to some extent. However, due
either to the nature of the locale or to the unaggressive policy of the merging bank, there is little or no
competition in the Ramsey-Mahwah area which would
be eliminated by the proposed merger.
The resulting bank, because of its increased size,
will be better able to compete with the other larger
banks in Bergen County, as well as with the various
other lending institutions in the area. The county
has 26 banks with a total of 62 offices. Three of these
banks are triple the size of the resulting bank and are
very aggressive competitors throughout northern New
Jersey. Of course, the large New York banks, with
branches conveniently located near the place of employment of the Ridgewood area commuters, cannot
be ignored as a serious source of competition to the
charter bank, as well as to all northern New Jersey
banking institutions. There are 11 State chartered
savings and loan institutions in the service area actively competing for savings funds and mortgage loans.
Although the resulting bank will provide the only
banking facilities between Ridgewood and the New
York border, it will offer more aggressive, forwardlooking service to the whole community by adding new
services, including an experienced trust department.
Relatively young officers will be available to solve a
management problem in the merging bank.
Applying the statutory criteria to the proposed
merger, we conclude that it is in the public interest
and the application is, therefore, approved.
JANUARY 18, 1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
Citizens First National Bank, with five offices and
over $70 million in deposits, proposes to merge with
First National Bank & Trust Co., with two offices and
$13 million in deposits. The head offices of the merging banks are located approximately 6 miles apart,
their closest offices are less than 3 miles apart, and all
their offices are located in the northwestern section
of Bergen County. Citizens is the 6th largest bank
in Bergen and ranks itself 12th among its competitors. Ramsey is among the smallest of Bergen County's 27 banks, but it is the only independent bank
in the largest segment of the growing northwestern
section of Bergen.
The proposed merger would eliminate direct competition between Citizens and Ramsey, eliminate 1 of
only 3 existing Bergen banking alternatives in a large
area of northwestern Bergen, and add 1 more step
in the notable decline in the number of banks in
Bergen County's 70 municipalities from 37 in 1958 to
the present total of 27. The competitive effect of
the merger will therefore be adverse.
THE BANK OF GLADE SPRING, GLADE SPRING, VA., AND VIRGINIA NATIONAL BANK, NORFOLK, VA.
Banking offices
Total assets
Name of bank and type of transaction
In operation To be operated
The Bank of Glade Spring, Glade Spring, Va., with
and Virginia National Bank, Norfolk, Va. (9885), which had
merged Jan. 29, 1965, under charter and title of the latter bank (9885). The
merged bank at the date of merger had
COMPTROLLER'S DECISION
On September 2, 1964, the $422 million Virginia
National Bank, Norfolk, Va., and the $2.7 million Bank
of Glade Spring, Glade Spring, Va., made application to merge under the charter and title of the former.
The 46 offices of the Virginia National are located
throughout Virginia, primarily in the NorfolkPortsmouth metropolitan area in the eastern section
of the State, a 12-county area in central Virginia, the
Danville-Martinsville area in southern Virginia, and
the Abingdon-Bristol area of southwestern Virginia.
$3, 191, 704
426,563,913
429, 176,324
1
45
46
The economic base of the charter bank is as comprehensive and diverse as that of the State of Virginia
and has been amply discussed in previous decisions
of this Office. The effect of this merger on the
charter bank will be imperceptible; discernible effects
will be realized only in the Glade Spring area.
The Bank of Glade Spring is located in the community of Glade Spring in Washington County, which
is in the southwest portion of Virginia near the state
lines of Tennessee and North Carolina. The service
area of the merging bank is considered to be the eastern
portion of Washington County and the western por47
tion of Smyth County. Approximately 62 percent of
the real estate in the area of the Glade Spring bank is
devoted to agricultural pursuits, the principal income
producers being burley tobacco, dairy farming, and the
raising of beef cattle and sheep. Agricultural sales in
the year 1960 exceeded $6 million. Industrial payrolls
in the area presently exceed $20 million, with several
nationally known concerns being among the principal
employers. During the last 10 years this area experienced a population increase of nearly 2.5 percent.
The widely diversified economy is an assurance of
prosperity in the future.
Although the merging bank is the only commercial
banking institution in Glade Spring, the town limits
by no means describe the relevant market. The small
lending limit of the Glade Spring Bank and its lack of
full-service conveniences have redounded to the benefit
of eight other commercial banking facilities located
in relatively close proximity to Glade Spring. With
the exception of a branch of the charter bank located
at Bristol, Va., all of these banks are larger than the
merging bank. The introduction of a well-managed,
full-service institution possessing the large lending
capacity of the Virginia National Bank will be a tonic
to competition among the remaining banks in the area.
At the same time, the residents will benefit from the
assurance of sound and responsible management suc-
FIRST STATE
cession and the availability of services heretofore
denied them.
Applying the statutory criteria to the facts of this
case, we find that the proposed merger will be in the
public interest, and the application is, therefore,
approved.
JANUARY 27, 1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
Virginia National, the second largest bank in Virginia, with assets of $422 million, proposes to merge
the Bank of Glade Spring, a bank with assets of
$2,702,000, located in a small community in southeastern Virginia. Since April 1963, Virginia National has merged 7 banks in 4 widely separated sections of Virginia, which had combined deposits at the
time merged equal to 42 percent of the present deposits
of Virginia National and operated 27 of the 46
present banking offices of Virginia National. Seven
independent banks have been eliminated and a rapidly
increasing concentration of banking in Virginia has
been fostered. The proposed merger, while not
significantly adverse to competition, would continue
that trend and it is the view of this Department that
the cumulative effect on competition of this series of
acquisitions will be adverse.
BANK OF HOAGLAND, HOAGLAND, IND., AND LINCOLN
FORT WAYNE, IND.
NATIONAL BANK & TRUST CO.
Banking offices
Total assets
Name of bank and type of transaction
In operation
First State Bank of Hoagland, Hoagland, Ind., with
and Lincoln National Bank & Trust Co. of Fort Wayne, Fort Wayne, Ind.
(7725), which had
merged Jan. 30, 1965, under the charter and title of the latter bank (7725).
The merged bank at the date of merger had
COMPTROLLER S DECISION
On October 29, 1964, the $170.8 million Lincoln
National Bank & Trust Co. of Fort Wayne, Fort
Wayne, Ind., and the $2.5 million First State Bank
of Hoagland, Hoagland, Ind., applied to the Comptroller of the Currency for permission to merge under
the charter and with the title of the former.
The applicant banks are located in Allen County
in the northeastern part of Indiana. Fort Wayne, the
county seat, has a population of 161,776 in an esti48
$2, 545, 056
1
177,638,718
5
179,823,846
To be operated
6
mated service area of 225,000. The economy is of a
diverse industrial nature including two manufacturing
plants of national reputation, each employing approximately 7,500 persons. There are also a number of
large wire-manufacturing companies, electronic companies, pump manufacturers, diamond die industries,
and machine tool industries. Recent statistics indicate a 2.4 percent unemployment rate, the lowest
in the State. The predominance of skilled and semiskilled labor results in a high per capita income and
general prosperity.
National Bank & Trust Co. of Fort Wayne under the
charter and title of the latter.
The Lincoln bank is presently the largest bank in
Fort Wayne and operates three branches in Fort Wayne
and one in New Haven, Ind. The bank to be acquired
is located in the town of Hoagland, Ind. (population
535), approximately 15 miles southeast of the head
office of the Lincoln bank and 9 miles from the nearest
branch of the Lincoln bank. The relative size of the
two banks is reflected in the following table:
The merging bank, located at Hoagland, 14.8 miles
to the southeast of the charter bank, has an estimated
population of 535. Its primarily agricultural economy
supports about a dozen commercial establishments.
The farming area served by the merging bank is regarded as prosperous and has an exceptionally high
ratio of owner-occupied homes.
The general area served by the charter bank includes 5 commercial banks with 23 offices. Competition is furnished by the $106.3 million Fort Wayne
National Bank and the $68.4 million Peoples Trust
& Savings Co. Competition furnished by insurance
companies, salesfinancecompanies, credit unions, and
personal loan companies is considered to be substantial.
A problem of management succession at the merging bank is indicated by the desire of the chief operating officer to retire and the inability to find a satisfactory successor. It is only through merger with the
charter bank, with its experienced officers and capable
staff of junior officers, that the merging bank can
obtain the effective management it requires.
The resulting bank will offer complete banking services not now offered by the merging bank, including
trust services, a consumer credit division and the availability of data processing. Greater operational
efficiency and more advantageous use of capital will
result from the proposed merger. Moreover, the resulting bank will be able to meet the credit needs of
worthy borrowers in the community because of its
greater lending limit.
The effect of the proposed merger on competition
will be minimal, since there is presently no significant
competition between the applicant banks. No adverse
effect on competition in the area can be foreseen.
Applying the statutory criteria to this proposal, we
conclude that the merger is in the public interest and
the application is, therefore, approved.
Total deposits
Total loans
Totalfixedassets
Total resources
There is no evidence that there is any significant
direct competition betwen the two banks. The area
served by the Lincoln bank is primarily commercial
and industrial whereas the area served by the State
bank is almost exclusively agricultural. State is the
only bank in Hoagland and in view of its small size
it is unlikely that any additional bank will be opened
in that community. Consequently, there is no likelihood that potential competition will be eliminated.
Although this merger does not immediately result
in the elimination of any significant direct or potential
competition, it is another instance of a large bank
absorbing a small independent bank which has experienced a record of substantial growth over the past 10
years. It thus contributes to the trend toward concentration in banking through the elimination of small
banks and is likely to induce additional mergers because of the impetus it may generate for other small
banks to merger in order to secure the competitive
advantages which the bank in Hoagland will obtain
by reason of its association with the larger Lincoln
bank.
While this proposed merger will enhance, to a degree, the position of the largest bank in Fort Wayne
and vicinity where banking resources are already
heavily concentrated and may induce further mergers,
on balance, we do not believe that the proposed merger
will have significant adverse effects.
JANUARY 27, 1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
Under the proposed merger agreement the First
State Bank of Hoagland is to be merged into Lincoln
Lincoln
State
$151,273,000 $2,285,000
72,548,000
994,000
2,469,000
29,000
170, 806,000 2, 507,000
#
*
49
THE FIRST NATIONAL BANK OF MILTON, MILTON, N.Y., AND THE FIRST NATIONAL BANK OF HIGHLAND,
HIGHLAND, N.Y.
Banking offices
Name of bank and type of transaction
Total assets
In operation
The First National Bank of Milton, Milton, N.Y. (11649), with
and the First National Bank of Highland, Highland, N.Y. (5336), which had. .
consolidated Feb. 11, 1965, under charter and title of the latter bank (5336).
The consolidated bank at the date of consolidation had
COMPTROLLER'S DECISION
On November 25, 1964, the $11.9 million First
National Bank of Highland, Highland, N.Y., and the
$1.9 million First National Bank of Milton, Milton,
N.Y., applied to the Comptroller of the Currency for
permission to consolidate under the charter and title
of the former.
The banks are located 5 miles apart in Highland
and Milton. Both communities are located in the
southeastern corner of Ulster County overlooking the
Hudson River and both share the same economic
base. The Highland-Milton region, one of the largest
fruitgrowing areas in New York State, is the location
of numerous large packinghouses for the storage, processing, and distribution of apples. A large number of
the residents, however, find it necessary to commute
to the nearby industrial plants located in Newburg
and Poughkeepsie.
Highland, with a population of 6,300 and a trade
area of 20,500 is growing and prosperous. The First
National Bank of Highland has contributed greatly to
this growth through its progressive outlook and aggressive management.
Milton, on the other hand, with a population of 600,
is static. The main north-south highway at one time
ran through the center of town but the relocation of
that highway bypassing Milton, marked the beginning
of a steady decline in the community. About 50 percent of the retail stores, on the main street, are vacant
and dilapidated. The First National Bank of Milton
has suffered with the community decline; its ultraconservative lending policies, and its low lending capacity
have prevented it from bringing new economic life to
the community. Businessmen seeking business loans,
homeowners seeking mortgage loans, consumers seeking consumer credit, and farmers seeking mortgage
and improvement loans cannot be and are not adequately served by their existing "home town bank."
As a result these residents now travel to Highland or
50
$1, 998, 282
12,195,482
To be operated
1
1
14, 193, 764
2
Marlboro, 5 and 3 miles distant, respectively, to obtain
satisfaction for their credit needs.
The competition between the consolidating banks
which will be eliminated is minimal. The consolidated
bank will rank 12th of the 13 existing banks in the
area and will bring into one institution for greater
operating efficiency and better use the capital resources
of both banks. This addition of capital will increase
the First National Bank of Highland's lending limit
and will place it in a better competitive position better
able to serve the residents of the area.
The community of Milton will be the greatest beneficiary of this consolidation. It will gain a strong,
aggressive, imaginative bank as the first step in reversing its downhill economic trend.
Applying the statutory criteria to the proposed consolidation, we conclude that it is in the public interest
and the application is, therefore, approved.
FEBRUARY 11, 1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
The proposed consolidation seeks to combine the
First National Bank of Highland, an aggressive bank
with assets of $11,960,000, and the First National Bank
of Milton, a small unit bank with $1,969,000 in assets.
The two banks are located only 5 miles from each other
and there is substantial competition. It will also reduce the number of banks in the Highland-MiltonMarlboro area, the primary service locale of both institutions, from three to two and will give the resulting
bank an extremely high percentage, 75 and 82 percent,
respectively, of deposits and loans held by area banking
offices. Taken in conjunction with the proposed
Kingston Trust-First National Bank of Marlboro
merger, presently pending before the Federal Reserve
Board, it presents an unfavorable merger trend that
will eliminate from competition two of three independent institutions. We, therefore, believe that the
effect of the proposed consolidation will be adverse.
T H E H O P BOTTOM NATIONAL BANK, H O P BOTTOM, PA., AND THE FIRST NATIONAL BANK OF HALLSTEAD,
HALLSTEAD, P A .
Name of bank and type of transaction
Total assets
Banking offices
In operation To be operated
The Hop Bottom National Bank, Hop Bottom, Pa. (9647), with
and the First National Bank of Hallstead, Hallstead, Pa. (7702), which had..
merged Feb. 19, 1965, under charter of the latter bank (7702) and under title
of "Peoples National Bank of Susquehanna County." The merged bank at
the date of merger had
COMPTROLLER'S DECISION
On December 1, 1964, the $4.3 million First National Bank of Hallstead, Hallstead, Pa., and the $3.4
million Hop Bottom, Pa., applied to the Comptroller
of the Currency for permission to merge under the
charter of the former and with the title "Peoples National Bank of Susquehanna County."
Hallstead, with a population of 1,600 persons and
a trade area serving some 16,500 persons, is located in
Susquehanna County in rural northeast Pennsylvania
near Binghamton, N.Y. Although an iron foundry
and a meatpacking plant provide employment for approximately 250 residents, the community benefits substantially from its proximity to Binghamton with almost
one-half of the town's working population employed
there. Notwithstanding the trend of the area's economy toward reliance upon manufacturing industry,
dairy farming and related activities still account for the
largest segment of the area's income.
Hop Bottom, located approximately 15 miles south
of Hallstead in the same county, has a population of
400 persons and serves a trade area of approximately
5,500. This community, with no industry and little
commercial activity, relies for its livelihood primarily
on the dairy and agricultural output of the surrounding
area.
$3,408, 695
4,413,540
1
1
7, 822, 235
2
At present, neither the charter bank nor the merging bank is in a position to offer serious competition to
the larger County National Bank of Montrose. The
proposed merger will enable the resulting bank to
compete with the County National Bank for loans to
some of the larger farms and businesses in the area.
Approval of the merger, therefore, will work toward a
more competitive balance in the banking structure.
Applying the statutory criteria to the proposal, we
conclude that it is in the public interest and the application, therefore, is approved.
FEBRUARY 16,1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
The proposed merger would eliminate no significant
direct competition between the applicants. It will,
however, aggravate the present concentration of banking power in Susquehanna County and eliminate one
independent bank from an area in which there are
presently only five independents. But in view of the
present dominance of the largest bank in the county
and the small size and location of the applicants, we do
not feel that the proposal would have substantially
adverse competitive effects.
THE FARMERS' NATIONAL BANK OF MCALISTERVILLE, MCALISTERVILLE, PA., AND THE FIRST NATIONAL BANK OF
PORT ROYAL, PORT ROYAL, PA.
Banking offices
Name of bank and type of transaction
Total assets
In operation To be operated
The Farmers' National Bank of McAlisterville, McAlisterville, Pa. (9526), with. . .
The First National Bank of Port Royal, Port Royal, Pa. (11369), with
the Port Royal National Bank, Port Royal, Pa. (11373), with
and the Juniata Valley National Bank, Mifflintown, Pa. (5147), which had. . .
merged Feb. 20, 1965, under charter and title of the latter bank (5147). The
merged bank at the date of merger had
$3,592, 190
2, 532,448
3, 114, 601
7, 708, 541
16, 947, 780
1
1
1
2
5
51
COMPTROLLER S DECISION
On December 7, 1964, the $7.4 million Juniata Valley National Bank, Mifflintown, Pa., the $3.4 million
Farmers' National Bank of McAlisterville, Pa., $2.4
million First National Bank of Port Royal, Pa., and
the $2.9 million Port Royal National Bank, Port Royal,
Pa. applied to the Office of the Comptroller of the
Currency for permission to merge under the charter
and with the title "The Juniata Valley National
Bank."
The applicants are located in Juniata County, a
rural agricultural area in south-central Pennsylvania
about 50 miles northwest of Harrisburg, which has a
population of nearly 16,000 persons. The area is
characterized by the small size of its farms and businesses. Mountainous terrain in the northern and
southeastern sections of the county, and lack of an
east-west highway form an effective barrier to contact
with neighboring counties. Because of its isolation,
the county's economy has failed to grow.
Mifflintown, home of the charter bank, is a residential community with a population of approxi. mately 900 persons which serves a trade area in the
center of the county containing an estimated 4,000 persons. Port Royal, home of two of the merging banks,
and McAlisterville, home of the third merging bank,
are smaller communities near Mifflintown serving trade
areas with populations estimated at 2,100 and 1,000
persons, respectively. None of the three communities has shown more than nominal growth or population increase over the past 20 years.
Eight banking offices serve Juniata County. Three
of these are branches of noncounty banks, one is a unit
bank in Mifflintown, and the remaining four are the
offices of the applicant banks. While approval of this
merger will combine four banks into one, little competitions exists between any of the four at present with
the possible exception of the two banks in Port Royal.
In that community, the merger will eliminate a local
banking alternative. Notwithstanding this fact, the
nonmerging unit bank in Mifflintown and the three
branches of the noncounty banks appear to provide
acceptable alternatives since they are located nearby.
It is apparent that lack of size has contributed to
the inability of the county's locally owned banks to offer
their communities better banking services. Consummation of the proposed merger, with the consequent
creation of a somewhat broader based bank, may
52
remedy this situation. The savings achieved through
elimination of the redundant Port Royal office, the
economy of branch operation, and the centralization
of management should provide at least the impetus for
a partial institution of more adequate banking
services.
Two special problems face these small unit banks:
Provision for future management and lending limits
too small to satisfy community credit demands. Consummation of the proposed merger should result in a
bank more capable of training or attracting potential
future management. As regards lending limits, in
1963, the applicants as a group placed or shared only
two loans which exceeded the lending limit of the
originating bank. However, it is expected that the
merger will have a beneficial impact on the county's
economy through stimulating the creation of larger
business and agricultural units and attracting new
industry to the area which will need larger loans. In
the past, mergers of a similar nature have provided
the nucleus for economic stimulation in areas comparable to Juniata County and there is no reason to expect a different result in this case. This merger will
provide another tool in the current effort to improve
economic conditions in Appalachia.
Applying the statutory criteria, we find the application to be in the public interest and it is, therefore,
approved.
FEBRUARY 16,
1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
The Juniata Valley National Bank, Mifflintown, Pa.,
had, as of October 1, 1964, assets of $7,464,000, deposits of $6,255,000, loans and discounts of $4,372,000
and capital accounts of $ 1,208,000. Its principal office
is located in Mifflintown, Pa., and it has one branch
office.
The Farmers' National Bank of McAlisterville, McAlisterville, Pa., operates a single office in McAlisterville, Pa., 9 miles northeast of the principal office of
Juniata Valley National Bank. The First National
Bank of Port Royal, Port Royal, Pa., and the Port
Royal National Bank, Port Royal, Pa., both operate
single offices in Port Royal, Pa., 3 miles south of
the principal office of Juniata Valley National Bank.
As of October 1, 1964, the financial position of these
banks was as follows:
[In thousands of dollars]
Assets
The Farmers' National Bank of McAlisterville.
The First National Bank of Port Royal
The Port Royal National Bank
$3,488
2,493
2,984
The application is silent with respect to any presently existing competition among the four banks in
the proposed merger. Two of the banks operate in the
same town, Port Royal, and are only 3 miles from the
principal office of the Juniata Valley National Bank.
In addition, the application indicates the banks have
common direct competitors. Consequently, it appears
Deposits
$3, 121
2,249
2,640
Loans and
Capital
accounts
$1,899
1,481
1,507
$367
244
326
that there is substantial direct competition among the
banks which would be eliminated if the merger were
consummated.
The proposed merger would also eliminate three of
only seven banks and materially increase concentration in commercial banking in Juniata County, Pa.,
and would have an adverse effect upon competition.
* * *
FIRST NATIONAL BANK OF SOUTH GATE, SOUTH GATE, CALIF., AND CITY NATIONAL BANK, BEVERLY HILLS, CALIF.
Name of bank and type of transaction
Total assets
Banking offices
In operation To be operated
First National Bank of South Gate, South Gate, Calif. (14899), with
and City National Bank, Beverly Hills, Calif. (14695), which had
merged Feb. 26, 1965, under charter and title of the latter bank (14695).
The merged bank at the date of merger had
COMPTROLLER S DECISION
On December 14, 1964, the $242 million City National Bank, Beverly Hills, Calif., and the $8.5 million
First National Bank of South Gate, South Gate, Calif.,
applied to the Office of the Comptroller of the Currency for permission to merge under the charter and
with the title of the former.
Beverly Hills, a city of 34,000 in Los Angeles County,
is unique in its economic influence. Long a nationally
familiar community because of its association with the
cinema industry, Beverly Hills has also gained prominence in the financial, insurance and real estate fields
due to the high average family income of $16,335 of its
denizens, as well as to its proximity to the bustling
business center of Los Angeles. Service and luxury
retail establishments, which serve an area much wider
than Beverly Hills, account for a substantial portion of
business income in the city. Altogether, the economic
impact of the commercial and financial enterprises in
Beverly Hills is not confined to the city's corporate
boundaries but is augmented by patronage from the
whole of Los Angeles County. Prospects for the future
indicate continued prosperity in Beverly Hills.
City National Bank, with 11 branches in Beverly
$7, 640,489
256, 001, 666
263, 642, 155
1
12
13
Hills and the Los Angeles metropolitan area and 1
branch in Palm Springs, serves an area population of
some 1.1 million persons. In the city of Beverly Hills,
the charter bank competes with branches of such major
institutions as Bank of America, Security First National
Bank, Crocker-Citizens National Bank, and United
California Bank. In all, there are 18 banking facilities in Beverly Hills with 4 banks having their head
offices there. In the entire area served by all branches
of City National Bank, there are some 189 banking
offices.
South Gate, also in Los Angeles County, has a population of 57,312. The city is a center of manufacturing industries which employ more than one-half of
the local labor force. Skilled and semiskilled blue
collar workers dominate local employment in the plants
of such companies as General Motors, Firestone Tire
& Rubber Co., and American Pipe & Construction Co.
The difference in the economic status of citizens and
workers in South Gate and in Beverly Hills is well illustrated by the average family income in South Gate,
which is $7,682, or some $8,500 per year less than that
of Beverely Hills' families. The South Gate figure is
well above that of the nation as a whole ($5,417), however. In addition, the community's commercial busi53
nesses serve citizens outside South Gate. Thus, the
present economic condition of the city can be described
as prosperous.
The First National Bank of South Gate is a unit
bank which has been in operation since May 1960. It
competes in South Gate with two branches of the Bank
of America and with a branch of Crocker-Citizens National Bank. Within a 5-mile radius of South Gate,
there are 41 additional banking offices.
It is evident that the applicant banks are in one of
the most flourishing and competitive banking areas
in the country. The charter bank, taking advantage
of its opportunities in Beverly Hills and the surrounding area, and because of progressive management and
a well-capitalized position, has offered extensive services to the banking public during its relatively short
existence since 1953. An average annual growth rate
in resources of City National Bank of 23.4 percent
during 1960-64 graphically illustrates this progress.
The merging bank, on the other hand, has not offered
the South Gate public the dynamic banking advances
characteristic of other banks in the area. While showing slightly increased earnings during the past 3 years,
the First National Bank of South Gate does not consider that it can adequately serve the community in its
present form.
A union with City National Bank will provide a salutary solution to this problem. Such services as mobile
home loans, interim construction financing, escrow
services, domestic credit information, and other services not offered by the merging bank will now be available at the South Gate office of the resulting bank.
The single loan limit for South Gate will increase from
$79,000 to in excess of $2.25 million and will thus
permit the bank to handle loan accounts of the heavy
and light industries in South Gate. The International
Banking Department of the resulting bank will be able
to service the accounts of the several South Gate industries which buy and sell products abroad. Finally,
present management of the merging bank will be
bolstered by the proven and forward-looking management of the charter bank.
These benefits, which will come as a result of the
merger, are particularly persuasive in the provision of
a full-service alternative bank to compete with the
large banks in South Gate to a degree not now possible
because of the limitations of the merging bank.
Applying the statutory criteria to the proposed
merger, we conclude that it is in the public interest and
the application is, therefore, approved.
FEBRUARY 18,
1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
Application has been made to merge the First National Bank of South Gate, South Gate, Calif., into
City National Bank of Beverly Hills, Calif., both of
which are located in the greater Los Angeles area.
Banking in the Los Angeles area is presently highly
concentrated in four of the large California branch
bank systems—Bank of America, Security First National Bank, United California Bank, and CrockerCitizens National Bank. Of the total bank deposits
in the Los Angeles metropolitan area these four banks
possess approximately 35.4, 25.6, 13.6, and 6 percent,
respectively. The acquiring bank will add only approximately 0.06 percent to its much smaller share of
the total bank deposits in the county as a result of the
merger.
In view of the relatively minor size of the applicant
banks in relation to this highly concentrated banking
market in which they compete and the fact that their
respective areas are currently served by numerous other
competitor banks, as well as numerous branch offices of
the large California branch bank systems, it is our
opinion that but for the slight increase in concentration the merger of the applicant banks will have little
adverse competitive effect.
THE BIRMINGHAM NATIONAL BANK, DERBY, CONN., AND THE SECOND NATIONAL BANK OF N E W HAVEN, N E W
HAVEN, CONN.
Banking offices
Name of bank and type of transaction
Total assets
In operation
The Birmingham National Bank, Derby, Conn. (1098), with
and Home National Bank of Derby, Derby, Conn. (15487), with
and the Second National Bank of New Haven, New Haven, Conn. (227),
which had
merged Feb. 26, 1965, under charter and title of the latter bank (227). The
merged bank at the date of merger had
54
$12,532,455
1,177,989
125,137, 719
138,844,608
To be operated
1
1
12
13
COMPTROLLER S DECISION
On January 4, 1965, the $13 million Birmingham
National Bank, Derby, Conn., and the $1 million
Home Trust Co., Derby, Conn., which has since that
time converted into a National bank with the title
"Home National Bank of Derby," applied to the
Comptroller of the Currency for permission to merge
with the $125 million Second National Bank of New
Haven, New Haven, Conn., under the charter and
title of the Second National Bank of New Haven.
The applicant banks are located in New Haven
County in south-central Connecticut. New Haven, the
county seat, has a population of 152,000 and an immediate trade area of 270,000. The city has a strong,
stable economy supported by a variety of light and
heavy industry, as well as by Yale University, which
is New Haven's largest single employer. Recent urban
renewal developments have reshaped the center of
the city, thereby revitalizing the area. Recent automotive transport route improvements, as well as improved port facilities, have tended to increase New
Haven's role as distribution center for central Connecticut.
Derby, approximately 10 miles west of New Haven,
has a population of 12,000, an increase of 18 percent
over the preceding decade. The trade area is primarily industrial and residential.
The two merging banks are the only banking offices
in Derby. The Home National Bank of Derby, however, is entirely owned by the Birmingham National
Bank. Because of the relationship between the Home
National Bank of Derby and the Birmingham National
Bank, there is no competition between them which will
be affected by the merger. Further, there is only
negligible competition from the Second National Bank
of New Haven due to the distance between New
Haven and Derby and because the Second National
Bank has done no soliciting of business or intensive
advertising in Derby. The increased deposit structure
of the Second National Bank in relation to the other
New Haven banks will not substantially change the
relative status of any of the New Haven banks.
The proposed merger will solve a lending limit problem, as the present limits at both Derby banks are not
sufficient to meet the needs of the area and the increased limit will allow the resultant bank to compete
more effectively for loans there.
Consummation of the proposed merger will introduce to the Derby area improved banking services, including check credit accounts, auto dealer financing
plans, retail sales financing, and improved fiduciary
facilities and services.
Applying the statutory criteria to the proposed
merger, we conclude that it is in the public interest
and the application is, therefore, approved.
FEBRUARY 26,1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
The proposed merger of two relatively small banks
some 10 miles west of New Haven into that city's
second largest commercial bank would end independent banking in Derby. It would increase by about
10 percent the deposits of the acquiring bank and thus
add further to the already dominant position which
the city's three largest banks enjoy. The merger
would continue the series of acquisitions which has
been responsible for much of the charter bank's recent
growth. Finally, it would eliminate a degree of both
present and prospective competition between the
merging banks.
For these reasons, it is our opinion that the
proposed merger would have an adverse effect upon
competition.
THE HOLLISTER NATIONAL BANK, HOLLISTER, CALIF., AND THE BANK OF CALIFORNIA, NATIONAL ASSOCIATION,
SAN FRANCISCO, CALIF.
Name of bank and type of transaction
Total assets
Banking offices
In operation To be operated
The Hollister National Bank, Hollister, Calif. (13510), with
and the Bank of California, National Association, San Francisco, Calif. (9655),
which had
merged Mar. 12, 1965, under charter and title of the latter bank (9655).
The merged bank at the date of merger had
$10, 749, 736
1
1,244,107,569
54
1, 254, 650, 218
55
55
COMPTROLLER'S DECISION
On December 16, 1964, the $1.17 billion Bank of
California, National Association, San Francisco, Calif.,
and the $11 million Hollister National Bank, Hollister,
Calif., applied to the Comptroller of the Currency to
merge under the charter and with the title of the former. San Francisco, a city of over 742,000 inhabitants, is a major port and financial center. It enjoys a
diverse and prosperous economy based on industry,
commerce, finance, and agriculture.
Hollister, located about 95 miles southeast of San
Francisco, has a population of about 6,500 in a trading area of about 17,000. Its economy is oriented to
agriculture and food processing and has experienced
steady development in recent years.
The charter bank is a full-service, modern bank offering the commercial and trust banking services required by a highly organized and industrialized society.
It operates 47 branches serving 34 northern, central,
and southern California communities and the cities of
Seattle and Tacoma, Wash., and Portland, Oreg. Although the sixth largest commercial bank in the State,
it holds only about 2.4 percent of total bank deposits
in California. Among its competitiors are the $14.8
billion Bank of America, the $4.5 billion Security First
National Bank, the $3.6 billion Wells Fargo Bank, the
$3 billion United California Bank, and $1.3 billion
Union Bank.
The single-office, merging bank is the only independent bank in its service area. It is a well-managed
institution and has experienced steady development in
recent years. Over the long run, however, it may not
be able to effectively meet the competition offered by
the Hollister Branch of the Bank of America and the
recently announced branch in Hollister of Wells Fargo.
The entry of the charter bank into the merging
bank's service area through merger will bring to that
area the advantages of another large, full-service bank.
Trust services, not now offered by the merging bank,
will become available to its customers.
The office of the charter bank nearest to the merging bank is 20 miles away and, consequently, the competition between them which might be eliminated as a
result of the merger is minimal. The additional resources which will be acquired by the charter bank will
have no effect upon the banking structure in California except to achieve a somewhat greater efficiency
in use of capital. In Hollister, the competitive picture
will be improved with the arrival of a new broad based
56
Applying the statutory criteria to this proposal, the
application is hereby approved.
MARCH 5,
1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
Hollister National is a successful single-office bank
with assets of $11,049,000, deposits of $10,057,000, and
loans of $4,773,000. It is located in Hollister, Calif.,
the county seat and principal commercial center of
San Benito County, an inland agricultural area in the
central coast region of the State. The only other
financial institution in the county is Bank of America,
which has a branch office in Hollister and another in
San Juan Bautista, 6 miles west of Hollister.
Bank of California is the 6th largest commercial
bank in California and 38th in the Nation, with assets
of $1,165,052,000, deposits of $1,057,383,000, loans of
$661,436,000, and substantial trust accounts. It has
45 banking offices in California and 1 each in Portland,
Oreg., and in Seattle and Tacoma, Wash. Bank of
California has engaged in seven acquisitions in the
past decade of which the most substantial was consummated in June 1964.
There appears to be little direct competition between
Hollister National and Bank of California because the
latter's closest offices are from 20 to 45 miles from the
communities served by Hollister National. The merger
would, however, eliminate some potential competition
between the applicants. By reason of their geographic
location, the three nearest offices of Bank of California
are among the next available alternatives for those
customers who are or may in the future become dissatisfied with the services rendered by the banks with
offices in San Benito County.
The proposed merger would also eliminate the only
locally owned and controlled bank now serving San
Benito County by converting that bank into another
branch of one of California's giant branch bank systems. The excellent earnings record and deposit
growth compiled by Hollister National in recent years
reflect considerable local demand for the services it
offers and augurs well for its future prospects as an independent competitor in the event the proposed merger
is disapproved.
There is a high level of concentration in California's
banking industry. The Bank of California and most of
the State's other largest banks have helped to create this
concentration by carrying out extensive and aggressive
merger programs. The proposed acquisition would
aggravate the competitive problems inherent in this
merger trend by further concentrating banking resources in California's largest banks, by eliminating a
successful and effective institution which is the only
locally owned and controlled bank serving its com-
munity, and by eliminating some potential competition
between the applicants.
We conclude that the proposed merger would have
an adverse effect upon competition.
THE PEOPLES NATIONAL BANK OF LEXINGTON, LEXINGTON, VA., AND THE FIRST NATIONAL EXCHANGE BANK OF
VIRGINIA, ROANOKE, VA.
Banking offices
Name of bank and type of transaction
Total assets
In operation To be operated
The Peoples National Bank of Lexington, Lexington, Va. (7173), with
and the First National Exchange Bank of Virginia, Roanoke, Va. (2737),
which had
merged Mar. 17, 1965, under charter and title of the latter bank (2737). The
merged bank at the date of merger had
COMPTROLLER'S DECISION
On January 7, 1965, the First National Exchange
Bank of Virginia, Roanoke, Va., and the Peoples
National Bank of Lexington, Lexington, Va., applied
to the Comptroller of the Currency for permission to
merge under the charter and with the title of the
former.
The First National Exchange Bank maintains headquarters and five of its branch offices in Roanoke,
whose population exceeds 100,000. The Roanoke
metropolitan area is the chief commercial and industrial complex in southwestern Virginia and serves
additionally as the major distribution center for most
of western Virginia and neighboring sectors of Tennessee, West Virginia, and North Carolina. The wide
variety and dynamism of the economy fully support
expectations for continued growth.
In addition to its Roanoke offices, the charter bank
operates 15 branches in 9 outlying communities
of southwestern Virginia. In varying degree, each of
these communities is experiencing transition from a
largely agricultural economic base to a more diversified base, including light manufacturing, industry, and
mining. The city of Bristol, located on the VirginiaTennessee border, is an exception in that it has already
become a manufacturing and commercial center of
some importance.
The $8 million merging bank maintains its headquarters and one of its two recently opened branches
in Lexington, some 45 miles northeast of Roanoke.
This town of 8,000 is the county seat, and the major
trading and shopping center of Rockbridge County.
Livestock raising and general agricultural pursuits
226-601—67-
$9, 328,046
3
251, 575, 692
21
260, 542, 308
24
provide a substantial portion of income in the Lexington area. Economic activity in Lexington depends
in great part on the operations of Washington and
Lee University and Virginia Military Institute.
The merging bank operates its second branch office
in Buena Vista, a town of some 6,500 located 6 miles
southeast of Lexington. Buena Vista has, in contrast
to its sister community, enjoyed a recent acceleration
in industrial activity which is now providing the major
impetus for growth. In spite of different economic
circumstances, Lexington and Buena Vista because of
their geographic proximity and ready access have been
fused into a common trading market and a common
area for banking competition.
Consummation of the merger will neither appreciably affect the relative standing of the charter bank
as a major banking competitor in the Commonwealth
nor eliminate a significant amount of competition
between the merging institutions. The office of the
charter bank nearest Lexington is some 43 miles
distant.
The competitive impact of this merger will be felt
chiefly in the Lexington-Buena Vista area. Banking
competition in these communities is composed of an
admixture of local institutions and of branches and
affiliates of larger statewide or regional banking operations. Thus, in Lexington, existing banking facilities are provided by the merging bank, the $7 million
Rockbridge National Bank, and the $3.3 million First
National Bank of Lexington. The latter is a subsidiary of the large Financial General Corp. which
controls a number of banks throughout Virginia. In
Buena Vista, banking competition is provided by the
57
recently opened office of the merging bank; the Peoples
Bank of Buena Vista, another subsidiary of Financial
General; and a branch office of Virginia National
Bank, the second largest bank in Virginia. The local
institutions are viable and the introduction of an office
of the charter bank cannot be expected to have substantially adverse results for these institutions. The
affiliate banks and the branch office of Virginia National Bank will, to a greater degree, be substantially
unaffected by consummation of the merger. The
competitive effects of the merger on banks in surrounding communities will be negligible as the competitive efforts of these institutions have historically
been directed to local banking markets. It is our
judgment, therefore, that the merger will not have
adverse consequences on the banking structure in the
Lexington-Buena Vista area.
The merger will prove to be of distinct benefit to
the Lexington-Buena Vista community. As experience had demonstrated in like circumstances, the
charter bank and other similar major regional banking
institutions make available a broadened range of banking services and specialties. It is of particular importance to developing areas such as the LexingtonBuena Vista region that the introduction of regional
banking facilities has frequently proven a catalyst to
the establishment and growth of needed industry and
commerce. To this end, the charter bank is equipped
to offer the full range of trust facilities, specialized
farm credit services, larger lending limits to assist in
industrial expansion, and the capital funds necessary
to meet local loan demand that cannot be satisfied
out of locally generated deposits.
Applying the statutory criteria to the proposed
merger, we conclude that it is in the public interest
and the application is, therefore, approved.
MARCH 16, 1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
Since October of 1960, First National Exchange
Bank, the largest bank in southwestern Virginia, has
merged 9 banks with 15 banking offices. From these
banks, at the time merged, 45 percent of the present
deposists and over 71 percent of the present banking
offices of First National Exchange Bank were acquired.
The explosive growth of First National Exchange
Bank via the merger process and the resultant elimination of nine independent banks in the space of about 4
years is a source of concern from a competitive standpoint; particularly so since it contributes to the rapidly
increasing concentration of banking in Virginia by
large banking institutions. The approval of the instant
merger would further encourage this trend and result
in an adverse effect on competition.
TRYON BANK & TRUST CO., TRYON, N.C., AND NORTH CAROLINA NATIONAL BANK, CHARLOTTE, N.C.
Name of bank and type of transaction
Total assets
Banking offices
In operation
Tryon Bank & Trust Co., Tryon, N.C, with
and North Carolina National Bank, Charlotte, N.C. (13761), which had
merged Mar. 22, 1965, under the charter and title of the latter bank (13761).
The merged bank at the date of merger had
COMPTROLLER S DECISION
On January 19, 1965, the North Carolina National
Bank, Charlotte, N.C, and the Tryon Bank & Trust
Co., Tryon, N.C, applied to the Comptroller of the
Currency for permission to merge under the charter
and with the title of the former.
The charter bank, with 68 offices, serves 12 principal
cities in North Carolina. Charlotte, the site of the
main office of the charter bank, is the largest city of the
two Carolinas, with a city population exceeding 225,000
and trade area population of 500,000. It is the commercial, financial, and distribution center of the largest
58
$8, 978, 708
708, 867, 916
717,068,468
To be operated
2
70
72
industrial area in the two States and one of the largest
in the South. Many nationally known and diverse
concerns have factories in the area. Other major
cities served by the charter bank include Greensboro,
the second largest city in the State with an estimated
population of 135,000, and Winston-Salem, third
largest city in the State with an estimated population
of 112,000. Both cities lie in areas containing important concentrations of the textile, tobacco, and
insurance industries.
Tryon is located at the western part of the State
in the foothills of the Blue Ridge Mountains, approximately 3 miles from the South Carolina border. With
a population of 2,200 persons, Tryon is in Polk County,
which has some 11,400 residents. Due to an unusual
thermal belt which extends through the area bringing
mild winters and cool summers, the area has become a
haven for wealthy retired individuals. Industry consists of a number of textile mills and smaller concerns
dealing in wood products. In all, some 85 manufacturing and commercial firms in Polk County have an
annual payroll exceeding $4.5 million. The county,
heretofore considered remote because of location and
inferior road networks, anticipates increased economic
activity and industrial expansion when north-south
Interstate Route 26 is completed.
The charter bank, although second in size among
banks in North Carolina, operated only 8.2 percent
of the banking offices located within the State and
holds only 15 percent of the total deposits held by
all banks in the State. It is in direct competition with
the Wachovia Bank & Trust Co., Winston-Salem; the
First Union National Bank, Charlotte; and the FirstCitizens Bank & Trust Co., Smithfield. The majority
of the charter bank's offices are located in the industrialized and economically well-diversified Piedmont
section of the State. It has no offices in the western
part of the State.
The merging bank is the only bank in Tryon. It
operates a branch at Columbia, approximately 4 miles
north of Tryon. Competition is offered by 5 banks
operating 11 offices within a radius of 23 miles from
Tryon. Tryon Trust is the smallest, holding 1 percent
of the total deposits in the service area. The principal
competition to Tryon Trust is provided by the $150 million First Commercial National Bank of South Carolina, which operates a branch 5 miles from Tryon.
Other competition is offered by the $500 million First
Union National Bank of North Carolina and the $200
million Northwestern Bank, North Wilkesboro.
The addition of the merging bank to the charter
bank will have no adverse effects on competition on a
statewide basis or in the primary service areas of the
charter bank. Consummation of the proposed merger
will increase the charter bank's share of total deposits
in the State by only 0.2 percent. The nearest offices
of the participating banks are located in Charlotte
and Tryon, some 100 miles apart. With the possible
exception of a limited amount of competition for trust
accounts, there is no competition between the participating banks which would be eliminated by the proposed merger.
Consummation of the proposed merger will serve
the convenience and needs of the Tryon community
more adequately than at present. Tryon Trust presently has a lending limit of some $65,000. The resulting bank will have a lending limit in excess of $4.5 million, and will thus be better equipped to compete for
accounts of the large- and moderate-size business firms
in the Tryon area and to meet their credit needs. The
retired residents in Tryon, many of whom have major
trust accounts with large banks elsewhere due to the
inability of the local bank to service such accounts, will
be better served by the resulting bank. The charter
bank operates an extensive trust department and holds
substantial trust assets of Tryon residents. The charter,
bank will also bring to Tryon diversified services, including an industrial development department staffed
with specialized personnel who will assist in developing the anticipated economic and industrial growth
of the area. The merging bank, due to its size and
limited resources, is not in a position to entice industry
to locate in the area.
Although the Tryon bank has long been a soundly
managed bank, its leadership and policies have provided for no management succession. Merger with
the charter bank will bring with it strong and extensive
management.
Applying the statutory criteria to the proposed
merger, we conclude that it is in the public interest
and the application is, therefore, approved.
MARCH 19,
1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
North Carolina National Bank, the second largest
bank in North Carolina in deposits, which operates
over 64 offices throughout the State proposes to acquire
Tryon Bank & Trust Co., a small independent bank in
Tryon which has a small branch office located to the
northeast in Columbus.
The merger, if approved, will eliminate any potential competition between the two banks and it will
result in the disappearance of another prosperous independent bank in North Carolina where commercial
banking has shown a constant trend toward concentration. The North Carolina National Bank itself has
materially contributed toward this concentration by
merging into it since September 1960, five smaller
banks and increasing its share of total deposits in the
State to over 15 percent.
We believe that the overall effect of this merger
upon competition in banking in North Carolina against
the background of growing concentration by merger,
will be adverse.
59
THE LIVE STOCK NATIONAL BANK IN CHICAGO, CHICAGO, I I I . , AND CENTRAL NATIONAL BANK IN CHICAGO,
CHICAGO, I I I .
Name of bank and type of transaction
Total assets
Banking offices
In operation
The Live Stock National Bank in Chicago, Chicago, 111. (13674), with
and Central National Bank in Chicago, Chicago, 111. (14362), which had
merged Mar. 26, 1965, under the charter and title of the latter bank (14362).
The merged bank at the date of merger had
COMPTROLLER'S DECISION
On December 16, 1964, the $247 million Central
National Bank in Chicago, Chicago, III, and the $59
million Live Stock National Bank of Chicago, Chicago,
111., applied to the Comptroller of the Currency for
permission to merge under the charter and with the
title of the former.
Chicago, with a population in excess of Zl/i million,
is the focal point of a large metropolitan area numbering over 6 million inhabitants. It is one of the largest
cities in America, strategically located in the middle
part of the country close to sources of raw materials
and markets. It is one of the great industrial complexes of America. It is the hub of the Nation's major
railroad systems and has a large port on the Great
Lakes which connects it by water to the rest of the
world. In addition to being an important industrial
city leading all others in the production of steel, telephone equipment, metal wares, and machinery, it is the
financial center for the Midwest.
The charter bank was organized in 1936. As one of
the banks located in the financial district of Chicago,
it presently ranks seventh among the metropolitan area
banks. Chief among its many competitors are the
Continental Illinois National Bank, the First National
Bank, the Harris Trust Co., the Northern Trust Co.,
the American National Bank, and the La Salle National Bank.
The merging bank is located about 5 miles south
of the charter bank. The Chicago stockyards, which
were the source of most of the merging bank's banking
activities, have been declining since 1950, resulting in
depressed conditions throughout the bank's service
area. Nevertheless, the bank has been successful in
maintaining active correspondent banking relationships with banks located primarily in the cattle feeding
areas of the Midwest. It is doubtful, however, that the
maintenance of the merging bank as an independent
institution can contribute in any measure to the growth
and prosperity of the Chicago metropolitan area.
60
$56, 033, 278
260, 559, 166
To be operated
1
1
311,592,444
1
Consummation of the proposed merger will solve the
problem of a bank faced with an uncertain future
caused by economic deterioration of its neighborhood.
The Chicago public will benefit from the resulting better use of capital and operating efficiency. Moreover,
the merger will be a step in the progressive movement
to create larger regional banks which must grow by
merger in Illinois because of the anachronistic antibranching laws there.
This proposal will have no significant adverse effects
upon competition in the Chicago area. The dollar
amount of the resulting bank's assets in relation to the
size of its relevant market, to the needs of its relevant
market, or to the size and number of its competitors are
hardly overwhelming. Indeed, although the Chicago
metropolitan area largely generates the necessary banking resources to support a dynamic economy without
excessive reliance on banking resources located elsewhere, these resources are so scattered among some 135
banks that only a minority of banks have sufficient
resources to satisfy the demands of the area's substantial
corporate manufacturing and other enterprises and to
absorb the risks inherent in financing newer and
healthy younger enterprises.
Applying the statutory criteria to this proposal, the
application is hereby approved.
MARCH 22,1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
The proposed merger of Central National Bank in
Chicago and Live Stock National Bank of Chicago
would have significantly adverse effects upon competition in the Chicago area.
The commercial banking structure in the city of
Chicago is characterized by heavy concentration of resources, particularly among the Loop banks, of which
Central is one. With such degree of heavy concentration, percentage shares of banks other than the two
largest may not at first glance seem very large. However, their absolute dollar amounts are substantial.
Thus, to argue, as the application does, that the resulting bank in the proposed merger would have a small
percentage share of the market ignores that it would
have $306.7 million in assets, and would be $41.6 million larger than the next largest bank, La Salle
National.
The present Chicago banking structure intensifies
the competitive pressure felt by its many small banks
each time one of the larger banks is permitted to merge.
Such pressure may well induce these smaller banks to
seek similar unions with other banks, with consequent
cumulative anticompetitive results.
The proposed merger would eliminate the substantial competition between Central and Live Stock
for the deposits and loans originating in those areas of
Chicago in which both compete. This competition, in
terms of percentages as well as dollar amounts, is significant. Moreover, since Illinois is a unit banking
State, the independent banking facility now operated
by Live Stock would be denied to the public.
Central has thus far had an extensive merger history which presently shows no signs of abating. Within
the past 10 years, Central has caused, through acquisitions, the closing of 4 banking facilities in Chicago.
These 4 banks brought to Central 48 percent of its
present dollar amount in deposits and 36 percent of its
dollar amount in loans.
That Live Stock's area currently has a relatively
short-term unfavorable economic outlook should not
justify the merger with the much larger Central.
Merger with other and smaller banks in Live Stock's
immediate area or in the city of Chicago could make
Live Stock's future brighter without the anticompetitive effects that would flow from its merger with Central. To use the present urban redevelopment dislocation as justification for the approval of mergers with
anticompetitive effects is to establish a poor precedent.
The very progress our cities are seeking could well be
impeded by the absence of experienced banks in the
redeveloped areas.
The proposed merger would have significantly adverse effects upon competition in commercial banking
in the Chicago area.
THE CENTRAL BANK OF HOWARD COUNTY, CLARKSVILLE, MD., AND THE CITIZENS NATIONAL BANK OF LAUREL,
LAUREL, MD.
Total assets
Name of bank and type of transaction
Banking offices
In operation To be operated
The Central Bank of Howard, County, Clarksville, Md., with
and the Citizens National Bank of Laurel, Laurel, Md. (4364), which had. . .
merged Mar. 31, 1965, under the charter of the latter bank (4364) and under
title "The Citizens National Bank." The merged bank at the date of merger
had
COMPTROLLER'S DECISION
On January 21, 1965, the Citizens National Bank of
Laurel, Laurel, Md., and the Central Bank of Howard
County, Clarksville, Md., applied to the Comptroller
of the Currency for permission to merge under the
charter of the former and with the title "The Citizens
National Bank."
Laurel, the headquarters of the charter bank, is located about midway between Baltimore and Washington in the approximate center of the rapidly merging
Baltimore-Washington metropolitan area. Although
Laurel is essentially a residential and commercial community, many of its 10,000 residents are engaged in a
wide diversification of local industries, including private research and development, small manufacturing
$4, 793, 154
23, 665, 674
28, 454, 838
2
5
7
plants, military and Government facilities, and local
businesses. There are presently over 80,000 employees
working within 12 miles of the city.
The merging bank maintains its main office and its
one branch in Howard County. Clarksville is the site
of Central's main office, and is a predominantly agricultural community, with an estimated population of
2,000, located 13 miles to the northwest of Laurel.
There has been a recent population increase in this
area due to the local development of new research
facilities. Simpsonville, a farm community approximately 5 miles southeast of Clarksville and the site of
Central's branch office, has a population of 1,000.
There are long-range plans for the establishment of a
new city, Columbia City, to contain 100,000 people
in the Howard County area.
61
As the merging banks are 13 miles apart, there will
be no significant elimination of competition. Other
competitors in this area include such major banks as
Equitable Trust Co., Baltimore, Md.; American National Bank of Maryland, Silver Spring, Md.; Suburban Trust Co., Hyattsville, Md.; and Citizens Bank
of Maryland, Riverdale, Md.
Applying the statutory criteria to the proposed
merger, we find that this proposal is in the public interest and it is, therefore, approved.
MARCH 22, 1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
The Citizens National Bank of Laurel (Citizens)
has requested permission to merge with the Central
Bank of Howard County (Central), under the title
of "The Citizens National Bank."
The main offices of the two banks are located 13
miles apart and their service areas do not overlap to
any substantial degree. Because of the distance between the banks, the proposed merger is not expected
to eliminate any substantial competition between Citizens and Central.
Citizens is the smallest bank in its service area with
approximately 2.67 percent of total area deposits.
The addition of Central's deposits to those of Citizens
would increase Citizens percentage approximately
one-half of 1 percent. In view of the size of the large
banks in Citizens' service area, it is unlikely that the
addition of Central's assets would result in a substantial lessening of competition.
Although Central is presently the only bank within
a radius of 9 miles any advantage derived from its
location is expected to be of short duration in view of
the intention of two large banks to open branches in
Central's service area.
GUARANTY BANK, TORRANCE, CALIF., AND CITY NATIONAL BANK, BEVERLY HILLS, CALIF.
Banking offices
Name of bank and type of transaction
Total assets
In operation
Guaranty Bank, Torrance, Calif., with
and City National Bank, Beverly Hills, Calif. (14695), which had
merged Apr. 2, 1965, under charter and title of the latter bank (14695). The
merged bank at the date of merger had
COMPTROLLER S DECISION
On January 26, 1965, the City National Bank, Beverly Hills, Calif., and the Guaranty Bank, Torrance,
Calif., applied to the Office of the Comptroller of the
Currency for permission to merger under the charter
and with the title of the former.
Beverly Hills, a city of 34,000 in Los Angeles County,
is prominent in thefinancial,insurance, and real estate
fields. Its wealthy residents, as well as its proximity
to the business center of Los Angeles, indicate continuing prosperity for the future.
Torrance, with a population in excess of 125,000,
is located in the southwestern part of Los Angeles
County, about 22 miles south of downtown Los
Angeles. It has a diversified industrial economy which
supports a rapidly increasing population.
The charter bank operates 10 branches in the Los
Angeles metropolitan area and 1 at Palm Springs, all
but 1 of which were established de novo.
The single office merging bank is over two years
old and is experiencing competition from 20 existing
62
$5, 235, 895
268, 858, 640
274, 094, 536
To be operated
1
13
14
or approved offices of other banks, as well as savings
and loan associations, within a 3-mile radius. The
bank has had management problems since its inception and has not made provision for management
succession.
Consummation of the proposed merger will result
in greater efficiency in operations and use of capital,
as well as provide the merging bank's customers with
services not now available. Moreover, the availability
of the charter bank's personnel will eliminate management difficulties facing the merging bank.
Since the two banks operate in different service
areas, consummation of the proposed merger will have
no adverse effect on competition. The availability
of banking services through numerous offices of other
banks provides the public in Torrance with ample
alternative banking facilities.
Applying the statutory criteria to the proposed
merger, we conclude that it is in the public interest
and the application is, therefore, approved.
MARCH 24, 1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
City National Bank, Beverly Hills, Calif., has applied for approval to merge Guaranty Bank, Torrance,
Calif.
Both banks are located in the Los Angeles metropolitan area, and compete within that area with 29
other banks which have numerous branches throughout the area. City National, with current deposits of
$230 million, is much smaller than six larger banks,
four of which account for approximately 80 percent
of total bank deposits in the metropolitan area. The
acquired bank, Guaranty Bank, is a small, new bank,
with total deposits of $4 million. City National accounts for approximately 1.71 percent and Guaranty
Bank 0.05 percent of total deposits in the area.
Thus, although this merger, viewed by itself, will
probably not give the resulting bank substantial additional advantages over its present competitors, it will
result in a slight increase in banking concentration in
the area. Moreover, the fact that this merger represents the third acquisition in less than 5 years by City
National, all the acquired banks being relatively new,
indicates that future acquisitions by this bank should
be closely scrutinized.
In view of these facts, it is our judgment that the
present merger, by itself may not have serious adverse
effects on the present state of competition among banks
in the Los Angeles metropolitan area but that future
acquisitions by City National bear close watching.
T H E FARMERS BANK & TRUST CO., ROCKINGHAM, N.C., AND SOUTHERN NATIONAL BANK OF NORTH CAROLINA,
LUMBERTON, N . C .
Banking offices
Name of bank and type of transaction
Total assets
In operation To be operated
The Farmers Bank & Trust Co., Rockingham, N.C, with
and Southern National Bank of North Carolina, Lumberton, N.C (10610),
which had
merged Apr. 3, 1965, under charter and title of the latter bank (10610). The
merged bank at the date of merger had
COMPTROLLER'S DECISION
On February 15, 1965, the $44.8 million Southern
National Bank of North Carolina, Lumberton, N.C,
and the $6 million Farmers Bank & Trust Co., Rockingham, N.C, applied to the Comptroller of the Currency for permission to merge under the charter and
with the title of the former.
Lumberton, with a population of 15,300, is the home
office of the charter bank and the seat of Robeson
County in southeastern North Carolina. The charter
bank operates 16 banking offices in 6 counties west
and north of Lumberton. Primary economic support
for the area is derived from agricultural activities, with
main emphasis on tobacco, corn, cotton, and peaches.
Tourism is of increasing importance in Lumberton,
as Interstate 95, the major artery of the Southeast, runs
near Lumberton.
Rockingham, the site of both offices of the Farmers
Bank & Trust Co., as well as one of the charter bank's
branch offices, is located 55 miles west of Lumberton
approximately 10 miles north of South Carolina.
Rockingham has been traditionally an agricultural
$5, 989, 829
2
44, 192,662
15
50, 182,487
17
town, but it is now served primarily by large textile
mills which represent a strong and progressive element
in the community's economy.
The charter bank has experienced internal growth
over the past 5 years in good measure through expanding branch operations. This growth is dramatized by
the fact that the charter bank has opened 12 new
branches since 1960. Although there has been significant expansion by the charter bank, it is still relatively small in relation to the $550 million First Union
National Bank of North Carolina, Charlotte, N.C, as
well as to the $153 million Branch Banking & Trust
Co. Fayetteville, N.C, and the $408 million FirstCitizens Bank & Trust Co., Fayetteville with which it
competes.
The resulting bank will have four of the eight banking outlets in the Rockingham area. It is not felt that
this percentage of deposits is excessive when the policies
of each bank are considered on the basis of their loan
structure. The charter bank has 30 percent of its outstanding loans in installment loans and another 30 percent in commercial and industrial loans, while Farmers
Bank & Trust has less than 10 percent in each of these
63
categories. The merging bank has concentrated on
real estate loans. It is obvious, then, that different
financial interests in the community are being served by
each bank, and the present competition between them
is not to be considered intense.
The merger will respond to the needs of the Rockingham community. The lending limit of the resulting
bank will permit it to make some of the loans to the
larger textile concerns which are presently banking
with the largest North Carolina banks. A number of
participation loans which were originated in the local
banks last year will be kept in the area for the benefit
of the community. Further, the prospects for growth,
which have been described as favorable in the Rockingham area, will be more satisfactorily served by a progressive institution such as the charter bank.
Applying the statutory criteria to this proposal, the
application is found to be in the public interest and is,
therefore, approved.
APRIL 2,
1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
The proposed merger of the Farmers Bank & Trust
Co., Rockingham, N.G., into Southern National Bank
of North Carolina, Lumberton, N.C., will eliminate all
existing competition between the two banks. It will
reduce the number of banks now operating in the
Farmers Bank service area from four to three and will
result in the emergence of a new bank which will control more than three-quarters of the banking resources,
deposits and loans in this area. The trend toward
merger and concentration in commercial banking prevailing in many parts of North Carolina would be
carried into another region of the State. The effect
on competition in commercial banking will be adverse.
THE FIRST STATE BANK OF COVINGTON, COVINGTON, TEX., AND THE FIRST NATIONAL BANK OF ITASCA,
ITASGA, TEX.
Banking offices
Name of bank and type of transaction
Total assets
In operation
The First State Bank of Covington, Covington, Tex., with
was purchased Apr. 5, 1965, by the First National Bank of Itasca, Itasca, Tex.
(4461), which had
After the purchase was effected, the receiving bank had
COMPTROLLER'S DECISION
The First State Bank of Covington, Covington, Tex.,
a State chartered bank subject to the supervision of the
Commissioner of Banks of the State of Texas and the
Federal Deposit Insurance Corporation, has been declared insolvent by the Federal Deposit Insurance Corporation in a letter of its Chairman to this Office under
date of March 30, 1965. The First National Bank of
Itasca, Itasca, Tex., has applied to the Comptroller of
the Currency for permission to purchase some of the
assets and assume the deposit liabilities of the First
State Bank of Covington. In its letter, the Federal
64
$795, 730
1
3, 236, 769
3, 900, 920
1
To be operated
1
Deposit Insurance Corporation stated that it plans to
facilitate this assumption transaction by purchasing
certain nonbankable assets of the First State Bank of
Covington for an amount which, with other assets of
the bank, will be sufficient to equal the liabilities of the
bank.
Because of the impending failure of the First State
Bank of Covington, and in order to protect its depositors and creditors, the First National Bank of
Itasca is hereby authorized to proceed with the assumption transaction.
APRIL 3,
1965.
T H E SOUTH OMAHA BANK, OMAHA, N E B R . , AND STOCK YARDS NATIONAL BANK OF SOUTH OMAHA, OMAHA, NEBR.
Banking offices
Name of bank and type of transaction
Total assets
In operation
The South Omaha Bank, Omaha, Nebr., with
was purchased Apr. 7, 1965, by Stock Yards National Bank of South Omaha,
Omaha, Nebr. (9908), which had
After the purchase was effected, the receiving bank had
COMPTROLLER'S DECISION
On December 15, 1964, the $34.7 million Stock
Yards National Bank of South Omaha, Omaha, Nebr.,
applied to the Comptroller of the Currency for permission to acquire the assets and assume the liabilities
of the $9.9 million South Omaha Bank, Omaha, Nebr.
Omaha, population 330,000, is located in eastern
Nebraska and is separated from the city of Council
Bluffs, Iowa, by the Missouri River. As one of the
country's largest livestock centers, Omaha industry is
primarily devoted to food processing, with meatpacking which employs 9,500 people, the largest single
industry. Insurance companies, 39 of which have
their home office in Omaha, play an important role
in the area's economy and employ over 8,000 people.
South Omaha, the site of the applicant banks, was
originally an incorporated community which in 1915
was annexed to Omaha. Its economy has been closely
allied with that of the stockyard, which has been in
a static condition for the past several years.
Located only seven blocks away from the charter
bank, the South Omaha Bank is presently operating
a detached teller facility jointly with Stock Yards
National. Upon the approval of the application,
Stock Yards National Bank will modernize and extend
its own headquarters, while the South Omaha Bank
will close its present headquarters and, pending approval by the Federal Deposit Insurance Corporation,
take over the Center Bank, approximately 3 miles to
the northwest.
Since both applicant banks are owned and controlled by the same parent corporation, Northwest
Bancorporation, Minneapolis, Minn., and presently
share their most important facility, the detached drivein teller facility, the proposed transaction will only
change the form, not the existence, of competition
between the subject banks. The effect on the only
other bank in South Omaha, the $18.2 million Packers
National Bank, will be minimal.
226-601—67
6
$10, 072, 726
1
29, 790, 840
38, 513, 868
2
To be operated
2
The large Omaha banks, other than the $130 million
United States National Bank of Omaha, which is an
affiliate of the Northwest Bancorporation, compete
only for the business in the South Omaha area which
would be out of the reach of the applicants as unit
banks. The other two large banks, the $29.5 million
Omaha National Bank and the $25 million First National Bank of Omaha, will, therefore, not be affected.
The only public inconvenience which will ensue as
a result of this proposal is the lessening of banking convenience to the South Omaha Bank's loan customers.
However, this will be a minimal consideration in relation to the greater efficiency achieved by merging the
subject banks, as well as by the increased lending limit
of Stock Yards National Bank and the proposed expansion of trust department activities.
Applying the statutory criteria to the proposed
merger, we conclude that it is in the public interest
and the application is, therefore, approved.
FEBRUARY 26,
1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
The South Omaha Bank and Stock Yards National
Bank of South Omaha, affiliates of Northwest Bancorporation, are, respectively, 10th and 4th in size
among 17 banks in the Omaha area, and they now
jointly operate as their most important facility a
modern drive-in, walk-in bank. By reason of their
joint ownership and, to a considerable extent, joint
operation, it does not appear that there is presently
substantial competition between the two banks which
may be lessened by the purchase of the assets and
assumption of liabilities by one bank of the other. Nor
does it appear, in view of the relative size of the participating banks and the availability of several other
banking alternatives, that there would be an impact
upon commercial banking in the Omaha area which
would be substantially adverse.
65
THE LEONIA BANK & TRUST CO., LEONIA, N.J., AND CITIZENS NATIONAL BANK OF ENGLEWOOD, ENGLEWOOD, N.J.
Name of bank and type of transaction
Total assets
Banking offices
In operation To be operated
The Leonia Bank & Trust Co., Leonia, N.J., with
and Citizens National Bank of Englewood, Englewood, N.J. (4365), which
had
merged Apr. 9, 1965, under the charter of Citizens National Bank of Englewood (4365) and under title of "Citizens National Bank." The merged
bank at the date of merger had
COMPTROLLER S DECISION
On February 2, 1965, the Leonia Bank & Trust Co.,
Leonia, N.J., and Citizens National Bank of Englewood, Englewood, N.J., applied to the Comptroller
of the Currency for permission to merge under the
charter and with the title of the latter.
Englewood, with a population of 27,900, is located
in Bergen County, directly across the Hudson River
from New York City in the northeastern corner of the
State of New Jersey. Englewood is primarily a residential community with many high-rental apartments
and numerous large private residences. In the past
decade, there has been a substantial amount of industrial and commercial development.
Leonia, with a population of 8,700, is the abutting
community south of Englewood and is also located
in Bergen County. Primarily residential in character
because of its proximity to New York City, Leonia is
tightly zoned to prohibit industry. Although a large
part of its growth has consisted of single-family residences, high-rise apartment construction has recently
begun and this development indicates future population growth.
The charter bank, serving an area extending to the
north and west of Englewood, operates 10 offices in 6
communities. It is the third largest bank of 25 commercial banks serving the county, but holds only 9.1
percent of deposits and 8.7 percent of loans of the
county banks. The two largest banks in the county,
the $281.5 million Peoples Trust Co. of Bergen
County and the $140.1 million National Community
Bank of Rutherford, hold 23 percent and 16 percent,
respectively, of total deposits of county banks.
The merging bank is a single unit bank. It ranks
14th in size in the county with 1.7 percent of deposits
and 2 percent of loans, and operates primarily in the
immediate area of Leonia. It is the only bank in
Leonia proper. It competes, however, with 17 other
banking offices, including offices of the 4 largest banks
in the county, within a radius of some 3 miles of Leonia.
66
$23,402, 692
1
125, 148, 032
10
148, 550, 725
11
The addition of the merging bank to the charter
bank will have little effect upon competition on a
countywide basis. The resulting bank will remain
third in size in the county, with 10.8 percent of deposits and 10.7 percent of loans. Although approval
of this merger eliminates some small degree of competition since the charter bank and the merging bank
have slightly overlapping trade areas, there will be
as many banking choices in the Leonia-Englewood
area after the merger as before due to the numerous
other banks and branches located there. In addition,
the organization of two new National banks has been
approved by this Office, one to be located in Englewood, home office city of the charter bank, and one to
be located in Fort Lee, approximately V/2 miles east
from Leonia. Further, many of the residents of this
area of Bergen County commute daily to New York
City and the neighboring industrial centers of New
Jersey. Thus, in addition to competition from numerous savings and loan associations, sales finance companies, and personal loan companies, commercial
banks outside the county, particularly those in New
York City, provide keen competition for banking business in the Leonia-Englewood area.
Consummation of the proposed merger will serve the
convenience and needs of the Leonia area more adequately than at present. The Leonia Bank & Trust Co.
has a lending limit of some $120,000; the resulting bank
will have a lending limit in excess of $800,000. Further, the resulting bank will be able to offer a much
wider range of banking services to customers in the
Leonia area. Although both institutions have trust
powers, Leonia Bank has not actively solicited such
business. Citizens National, on the other hand, will
bring to the Leonia area the services of an active, fully
developed trust department.
The merging bank, while concentrating on consumer financing has been unable to give adequate
attention to real estate lending. The charter bank, on
the other hand, has been much more active in real
estate lending, and the residents of the Leonia area
should benefit from this policy.
In addition, Citizens National has completed automation of its demand deposit and mortgage loan accounting, a step which the Leonia Bank has yet to take.
Computer services will thus be made available to commercial customers throughout the Leonia area. Leonia
Bank customers may also benefit from Citizens National's lower service charge policy.
Applying the statutory criteria to the proposed
merger, we conclude that it is in the public interest
and the application is, therefore, approved.
APRIL 9,1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
The proposed merger of a relatively small independent bank and Bergen County's third largest commercial bank would eliminate a degree of competition
between the banks which arises from the proximity of
their offices. It would eliminate an independent bank
which appears to be a successful competitor: The
merging bank, with about one-fifth the deposits of the
charter bank, had nearly one-third the latter's earnings
during the past 5 years, and the merging bank's deposits have grown from about $13 million at the end
of 1960 to $20 million by the end of 1964.
Approval of this merger would add to the high
concentration of commercial banking resources in
Bergen County which has been furthered by the recent
merger activity of the county's largest banks. The
charter bank, which has declared its intention to participate in banking expansion in Bergen County, apparently believes that mergers furnish an appropriate
means of such growth. The charter bank discerns
"a definite trend toward fewer, larger banks with expanding branch systems" (application, p. 24). The
proposed merger may thus be a prelude to a further
decrease-by-merger in the number of independent
banks in Bergen County even as the county continues
its economic expansion.
For these reasons, it is our opinion that the proposed
merger will have a substantial adverse effect on competition in commercial banking in Bergen County.
FIRST NATIONAL BANK OF GATE CITY, GATE CITY, VA., AND VIRGINIA NATIONAL BANK, NORFOLK, VA.
Banking offices
Name of bank and type of transaction
Total assets
In operation
First National Bank of Gate City, Gate City, Va. (13502), with
and Virginia National Bank, Norfolk, Va. (9885), which had
merged Apr. 9, 1965, under charter and title of the latter bank (9885). The
merged bank at the date of merger had
COMPTROLLER S DECISION
On February 5, 1965, the $441.7 million Virginia
National Bank, Norfolk, Va., and the $11.2 million
First National Bank of Gate City, Gate City, Va.,
applied to the Office of the Comptroller of the Currency for permission to merge under the charter and
with the title of the former.
Norfolk, with a population of over 300,000, is the
largest city in Virginia and the principal city of the
rapidly growing Tidewater region of the State. The
population of its trade area on both sides of Hampton
Roads is about 800,000. The area's economy depends
on a diversification of industry and military establishments. Its port of entry, Hampton Roads, ranks second only to New York City in value of exports. The
Chesapeake Bay Bridge Tunnel, completed in April
$12,575,629
423,112,582
435, 574, 954
To be operated
3
46
49
1964, will give the area increasing importance as a
distribution center.
Gate City is a community with a population of about
2,000 located in a predominantly agricultural region
of southwest Virginia, about 8 miles from Kingsport,
Tenn. The industries in Kingsport employ many of
Gate City's working population and the continued industrial development of this adjacent Tennessee area
should inure to the benefit of the Gate City economy.
The charter bank operates 24 branches in the Norfolk area, 19 branches in central Virginia, and 2
branches in southwest Virginia. As a dynamic, fullservice bank, it has contributed in substantial measure
to the economic growth of Tidewater Virginia. Its
operations in the State place it in competition with
Financial General Corp., United Virginia Bankshares,
Inc., the Virginia Commonwealth Corp., and First
67
Virginia Corp., all of which are bank holding companies. Its other major competitors include First and
Merchants National Bank, Richmond, and First National Exchange Bank of Virginia, Roanoke.
The merging bank maintains its three offices in Gate
City and the surrounding area. Growth of its assets
and earnings in recent years has been satisfactory.
The bank, however, lacks depth and continuity of
management.
Consummation of the proposed merger will complement the development of regional banking systems in
Virginia and will bring to the merging bank's area
retail banking and trust services not now available.
The charter bank's pool of experienced personnel will
bring better bank management to the merging bank's
area.
The merger will have no adverse effect on competition in Virginia. The position of Virginia National
Bank among Virginia banking systems will be unaffected after the merger. In the merging bank's area,
the resulting bank will more effectively meet the competition from the Kingsport, Tenn., area. Moreover,
it will bring the charter bank further into southwest
Virginia in competition with the aggressive First National Exchange Bank of Virginia.
Applying the statutory criteria to the proposed
merger, we conclude that it is in the public interest
and the application is, therefore, approved.
APRIL 9, 1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
Virginia National, the second largest bank in Virginia, proposes to merge the First National Bank of
Gate City, a bank with assets of $11,192,000, which
operates three banking offices, each located in a small
town in southwestern Virginia.
Since April of 1963, Virginia National has merged
8 banks in 4 widely separated sections of Virginia,
which had combined deposits at the time merged equal
to approximately 43 percent of the present deposits of
Virginia National, and operated 28 of the 47 present
banking offices of Virginia National. Eight independents have been eliminated and the rapidly increasing concentration of banking in Virginia has been
fostered.
The proposed merger will continue that trend and
it is the view of this Department that the cumulative
effect on competition of this series of mergers will be
adverse.
THE PEOPLES NATIONAL BANK OF FARMVILLE, FARMVILLE, VA., AND VIRGINIA NATIONAL BANK, NORFOLK, VA.
Banking offices
Name of bank and type of transaction
Total assets
In operation
The Peoples National Bank of Farmville, Farmville, Va. (9222), with
and Virginia National Bank, Norfolk, Va. (9885), which had
merged Apr. 9, 1965, under the charter and title of the latter bank (9885).
The merged bank at the date of merger had
COMPTROLLER'S DECISION
On February 5, 1965, the Virginia National Bank,
Norfolk, Va., and the $9.5 million Peoples National
Bank of Farmville, Farmville, Va., applied to the
Comptroller of the Currency for permission to merge
under the charter and with the title of the former.
The charter Virginia National Bank operates some
46 offices in 4 widely separated areas of the Commonwealth. The bank's headquarters are maintained in
Norfolk, a city which serves as the hub of the industrially oriented Tidewater region and the bank's major
market. The second most important area of the
charter bank's operations is centered in Charlottesville
in the north-central section of the State. Other offices
68
$10, 144, 803
435, 574, 955
445,425, 250
To be operated
1
49
50
are operated in the Abingdon-Bristol area at the southwest extreme of the State and in the Danville region
near the midpoint of the Virginia-North Carolina
border. The economic factors influencing the charter
bank's policies and performance are widely diverse as
they range from basic agriculture to heavy industry and
shipping.
The merging Peoples National Bank operates its
main office and its sole branch in Farmville, a community of some 4,500 situated in central Virginia, 65
miles west of Richmond and 140 miles northwest of
Norfolk. Farmville is the county seat of Prince Edward County and the trading center for a primarily
agricultural region where tobacco is the principal crop.
Some elements of diversity in the local economy are
afforded by the presence of a shoe manufacturing
corporation, by the operation of two colleges in the
vicinity, and by the operation of small local industries
related to farm and forest products.
Consummation of the merger will not eliminate any
significant competition between the applicant banks as
the nearest office of the charter bank is located at
Dillwyn, some 20 miles north of Farmville. In addition, the merger can be expected to have only a minor
effect on statewide banking competition. While the
charter bank ranks second in size among Virginia
banks, other large statewide and regional banks and
banking systems provide vigorous banking competition
that will not be diminished by the proposed merger.
The merger will have some competitive impact in
the Farmville area. Banking competition there is provided by the merging bank, by the $11 million First
National Bank of Farmville, by the $5 million Planters
Bank & Trust Go. of Farmville, and by banking institutions of similar size headquartered in nearby communities. The merger, then, will introduce a large statewide banking institution into a banking market that
has historically been served by locally headquartered
banks with modest assets. Nontheless, the facts of the
present application and our experience in comparable
situations suggest that the existing banks will remain
fully able to grow and to serve the Farmville community. At the same time, we believe the merger will
stimulate banking competition in Farmville and bring
to this area banking services and lending capacities that
heretofore were not readily or fully available. The experienced and aggressive industrial development programs and the municipal financing facilities of the
charter bank should prove of particular benefit.
Applying the statutory criteria to the proposed
merger, we conclude that it is in the public interest
and the application is, therefore, approved.
APRIL 9, 1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
Virginia National, the second largest bank in Virginia, proposes to merge the Peoples National Bank, a
bank with assets of $9,500,000, which operates a single
banking office.
Since April of 1963, Virginia National has merged
8 banks in 4 widely separate sections of Virginia, which
had combined deposits at the time merged equal to
approximately 43 percent of the present deposits of
Virginia National and operated 28 of the 47 present
banking offices of Virginia National. In the process
eight independents have been eliminated and the
rapidly increasing concentration of banking in Virginia
has been fostered.
The proposed merger will continue that trend and
it is the view of this Department that the cumulative
effect on competition of this series of mergers is adverse.
ORANGE EMPIRE NATIONAL BANK, ANAHEIM, CALIF., AND UNITED STATES NATIONAL BANK, SAN DIEGO, CALIF.
Banking offices
Name of bank and type of transaction
Total assets
In operation To be operated
Orange Empire National Bank, Anaheim, Calif. (15361), with
was purchased Apr. 12, 1965, by the United States National Bank, San Diego,
Calif. (10391), which had
After the purchase was effected, the receiving bank had
COMPTROLLER'S DECISION
On April 10, 1965, application was made to the
Comptroller of the Currency for permission for the
United States National Bank, San Diego, Calif., to
purchase assets and assume the deposit liabilities of
the Orange Empire National Bank, Anaheim, Calif.
It is found that an emergency situation exists within
the meaning of the seventh sentence of 12 U.S.C.
1828 (c) and, with respect thereto this office must act
$6, 415, 955
1
260, 254, 939
266, 670, 894
34
35
immediately. Accordingly, approval by the shareholders of the Orange Empire National Bank of the
purchase and sale agreement is waived.
Because of the emergency nature of the situation,
and in order to protect the depositors, creditors, and
shareholders of the Orange Empire National Bank,
the United States National Bank is authorized to
proceed with the purchase and assumption transaction.
APRIL 10, 1965.
69
CENTRAL NATIONAL BANK OF WASHINGTONVILLE, WASHINGTONVILLE, N.Y.,
AND COUNTY NATIONAL BANK,
MlDDLETOWN, N.Y.
Banking offices
Name of bank and type of transaction
Total assets
In operation
Central National Bank of Washingtonville, Washingtonville, N.Y. (13913), with. .
and County National Bank, Middletown, N.Y. (13956), which had
merged Apr. 23, 1965, under charter and title of the latter bank (13956). The
merged bank at the date of merger had
COMPTROLLER'S DECISION
On February 23, 1965, County National Bank, Middletown, N.Y., and the $5 million Central National
Bank of Washingtonville, Washingtonville, N.Y., applied to the Office of the Comptroller of the Currency
for permission to merge under the charter and with
the title of the former.
Both banks are located in Orange County, an area
of about 850 square miles containing a population of
185,000. Orange County is situated in the southeastern
part of the State approximately 50 miles northwest of
New York City. Although largely a rural area, the
county is experiencing steady residential construction
and continued population growth with attendant commercial expansion.
Middletown, located in the northwest part of Orange
County in the foothills of the Catskill Mountains, is a
city of about 23,600 people. While dairy farming
has predominated for many years, land is increasingly
being used for shopping centers, industrial buildings,
and residential sites.
County National Bank is the largest of the 14 countybased commercial banks. It operates eight branches
in Orange County and one in Sullivan County, N.Y.
Its trade area is estimated at 95,000 persons.
Washingtonville, situated 19 miles east of Middletown in the east-central portion of Orange County, is
a rural village with a population of about 1,400 serving a trade area of 3,000. The area is devoted chiefly
to dairy farming. Although Washingtonville contains
a few retail service establishments, shopping centers
in outlying sections or in surrounding villages and nearby cities provide for most of the area's needs.
Central National Bank of Washingtonville, operating
a single banking office, is the only bank in the village.
It does not offer complete banking services and its
loan policy has been restrictively conservative. Its
prospects for future growth are quite limited.
Orange County is served by 32 banking offices.
Additionally, it is served by several savings and loan
70
$5, 700, 026
69, 703, 375
To be operated
1
10
75, 403,401
11
associations, small loan companies, and sales finance
companies. Competition is vigorous. If the proposed
merger of County Trust Co., White Plains, N.Y., with
Intercounty Trust Co., Monticello, N.Y., and Goshen
National Bank, Goshen, N.Y., is approved, that resulting bank would introduce into Orange County the
services of a bank several times the size of the charter
bank with a proportionate competitive advantage.
This merger will have little effect on competitor
banks now serving Middletown and its immediate area.
It will enable the charter bank to compete more efficiently in the southern part of Orange County which is
experiencing the major portion of growth in the county.
There is little competition between the two applicant banks. Offices of competitor banks are nearer to
the office of the merging bank than are branches of
the charter banks. The merging bank makes no consumer installment loans and thus offers no competition
in this important field.
Applying the statutory criteria to the proposed
merger, we conclude that it is in the public interest
and the application is, therefore, approved.
APRIL 22,
1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
County National Bank operates 9 banking offices
throughout Orange County, N.Y., and a 10th office
located in adjoining Sullivan County. Since 1955 it
has acquired five formerly independent banks located
in all parts of Orange County. As of December 31,
1964, it had total assets of $70,483,000, total deposits
of $64,625,000 ($29,467,000 demand, $35,158,000
time), and net loans and discounts of $42,873,000.
Total capital accounts were $4,598,000.
Central National Bank of Washingtonville, Washingtonville, N.Y., is located in east-central Orange
County 19 miles east of the charter bank's home office.
As of December 31, 1964, it had total assets of
$5,085,000, total deposits of $4,734,000 ($2,893,000
demand, $1,841,000 time), and net loans and dis-
counts of $2,174,000. Total capital accounts were
$351,000.
The amount of direct competition between the two
banks is difficult to assess. What competition exists
is diminished by the fact that six banking offices of
competitor banks are nearer to the office of Central
National Bank than are the nearest branches of County
National Bank, and, further, by the fact that Central
National Bank makes no consumer installment loans.
What direct competition exists, therefore, is probably
insubstantial.
Thirteen banks operating 18 banking offices comprise the service area of Central National Bank. Two
banks presently account for 47 percent and 53 percent
of total deposits and total loans, respectively, in this
area. The percentages for the County National Bank
are 8.32 percent and 9.29, respectively, for total deposits
and total loans. Central National Bank's respective
percentages for total deposits and total loans are 2.14
percent and 1.54 percent. While the merger alone
would not have a significant adverse effect on competition, we wish to point out our increasing concern
over the accelerating pace of mergers in this section
of the State of New York, as well as in the State generally, and the consequent reduction in the number of
competing independent banks. This trend in the long
run will have a materially adverse effect on competition in commercial banking in the State.
BANK OF MILLVALE, MILLVALE, PA., AND WESTERN PENNSYLVANIA NATIONAL BANK, PITTSBURGH, PA.
Total assets
Name of bank and type of transaction
Banking ojfees
In operation To be operated
Bank of Millvale, Millvale, Pa., with
and Western Pennsylvania National Bank, Pittsburgh, Pa. (2222), which had. .
merged Apr. 23, 1965, under charter and title of the latter bank (2222). The
merged bank at the date of merger had
COMPTROLLER'S DECISION
On February 17, 1965, Western Pennsylvania National Bank, Pittsburgh, Pa., and the $25.4 million
Bank of Millvale, Millvale, Pa., applied to the Office
of the Comptroller of the Currency for permission to
merge under the charter and with the title of the
former.
Pittsburgh, with a population of 604,000, is the
second largest city in Pennsylvania. The Pittsburgh
area has long been recognized for its heavy industry,
as it contains the world's largest manufacturers of
aluminum, steel, rolling mill machinery, and airbrakes.
The area accounts for 21 percent of the entire national
output of steel and is the home of more than 100
industrial research and testing laboratories.
The Borough of Millvale, with a population of
6,624, is located across the Allegheny River from Pittsburgh and shares in the economic benefits of the Metropolitan Pittsburgh area. The Millvale area is both
residential and commercial.
The charter bank operates 53 offices. It is one of
the major banks in the Pittsburgh metropolitan area,
where it competes with the Mellon National Bank
& Trust Co., operating 78 branches; the Pittsburgh
$24,690,315
579, 178,980
603, 869, 296
1
54
55
National Bank, operating 68 branches; and the Union
National Bank of Pittsburgh, operating 30 branches.
Competition between the charter bank and the
merging bank is insignificant. The charter bank's
nearest office is in Sharpsburg, Pa., which is 2.8 miles
distant. The merging bank is the only bank operating
in the Borough of Millvale. Competition will not be
hindered by the merger but will, in fact, be stimulated
because of the charter bank's aggressive marketing
policies. The position of the charter bank as the third
largest bank in Pittsburgh will remain relatively unchanged but the merger will allow it to compete more
effectively with the substantially larger Mellon National
Bank & Trust Co. and the Pittsburgh National Bank.
The advantages of a major bank will be made available to the Millvale public. The merging bank does
not have a trust department; trust services will be
available after the merger. The merging bank does
not have specialized consumer and mortgage loan departments; the resulting bank will offer lending services in the fields of cpnsumer credit and home mortgages. In addition, other specialized services will be
made available because of the modern data-processing
center which serves the charter bank. It is evident
that the entry of the charter bank into Millvale will
71
give its citizens the kind of banking facilities they need
and deserve.
Applying the statutory criteria to the proposal, we
conclude that it is in the public interest, and the
application is, therefore, approved.
APRIL 19, 1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
Western Pennsylvania National Bank is the third
largest bank in the Pittsburgh area (Allegheny County), accounting for approximately 12 percent of the
commercial banking business therein. This area has
for many years been characterized by an unusually high
degree of concentration in commercial banking, the
result to a large extent of a great many mergers and
acquisitions by and among the leading banks. The
top three banks currently account for approximately
80 percent of total Allegheny County deposits.
Western itself has been an extremely active participant in the consolidation movement having since 1953
acquired 23 small- and medium-sized banks in Allegheny County and the adjoining counties of Westmore-
land, Washington, and Beaver. The instant proposal
is Western's fifth merger in the past year.
Millvale Bank, the seventh largest bank in Allegheny
County, is one of the few remaining medium-sized
banks in the area and under an alert management has
shown a good record of earnings over the years. Approval of this merger would only serve to eliminate
one of the few banks competing successfully with the
large banks in the area, and would, in addition, eliminate existing competition between the participating
banks. The continuing elimination of the smaller
banks in Allegheny County has proceeded at an alarming rate in the past few years and threatens to concentrate the total banking assest of this substantial
commercial area in the hands of a few large institutions, each of which appears to prefer the quick acquisition of a competing bank to the establishment of a
de novo branch whenever the choice presents itself.
This trend has already eliminated effective competition
in the area and should not be permitted to continue.
We, therefore, believe that approval of this merger
will have a seriously adverse effect on competition in
the Pittsburgh area.
DUNKIRK TRUST CO., DUNKIRK, N.Y., AND LIBERTY NATIONAL BANK & TRUST CO., BUFFALO, N.Y.
Banking offices
Name of bank and type of transaction
Total assets
In operation
Dunkirk Trust Co., Dunkirk, N.Y., with
and Liberty National Bank & Trust Co., Buffalo, N.Y. (15080), which h a d . . . .
merged Apr. 27, 1965, under charter and title of the latter bank (15080). The
merged bank at the date of merger had
COMPTROLLER'S DECISION
On February 23, 1965, Liberty National Bank &
Trust Co., Buffalo, N.Y., and the $15.4 million Dunkirk Trust Co., Dunkirk, N.Y., applied to the Office
of the Comptroller of the Currency for permission to
merge under the charter and with the title of the
former.
Buffalo, located in western New York, is the second
largest city in the State. It has a population of 533,000
and serves as the financial center of an area which
numbers over V/2 million people. The city is linked
to oversea markets by the St. Lawrence Seaway and
to the entire United States by an extensive railway
system. Heavy industry and commerce make Buffalo
a major contributor to the economy of the northeast.
Dunkirk, with a population of 18,000, is located
72
$15,216,556
341, 524, 888
356, 833, 382
To be operated
1
32
33
about 45 miles southwest of Buffalo in the heart of
the large agricultural region devoted primarily to
grape production. The city derives most of its
economic support from agriculture and recreational
facilities. The area's population in recent years has
remained static.
The charter bank operates 32 offices, 16 in Buffalo
and the remainder throughout western New York. It
has followed an aggressive policy of expansion by
merger and by de novo branching in order to keep pace
with the growth of the suburban area around Buffalo
and certain rural communities and in order to try to
achieve some degree of competitive balance with its
large competitors. Among its many competitors are
Marine Trust Co., an affiliate of the $3.16 billion
Marine Midland Corp., operating offices in 30 communities in western New York; the Manufacturers &
Traders Trust Co.; the Buffalo Savings Bank; the Erie
County Savings Bank; and the Western Savings Bank.
The single-office merging bank has not adapted to
the changing needs of a growing society. Deposit
growth has been slow, and retail banking services are
limited. Moreover, senior management has made no
provision for succession.
The merger will bring to Dunkirk the facilities of a
large, full-service bank and offer competition to the
Dunkirk office of the Chautauqua National Bank of
Jamestown and the Manufacturers & Traders Trust
Co. Consumer lending services and more funds for
financing will be available. The management problem of the merging bank will be solved by the availability of the personnel of the charter bank.
The consummation of the proposed merger is in
keeping with the need for a larger regional banking
system in western New York capable of meeting, with
its own resources, all the credit needs of its growing industrial economy without reliance on the larger financial centers located elsewhere. If the industrial
economy of western New York is to develop in a balanced manner, some consolidation of existing banking
facilities is necessary. A fragmented banking system,
suitable perhaps for a rural economy with minimal
credit requirements, does not meet the needs of the
present, and must yield to growth for the sake of
efficiency and economic progress.
The proposed merger will not diminish competition
generally in the Buffalo region, nor specifically between
the charter and merging banks. The presence of two
commercial bank competitors considerably larger than
the resulting bank, one of which is a member of a large
bank holding company, precludes any lessening of
competition. Moreover, the availability of another
office of a large bank in the merging bank's area will
intensify bank competition there.
Applying the statutory criteria to this proposal, the
application is found to be in the public interest and
it is, therefore, approved.
APRIL 26, 1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
The proposed merger of Dunkirk Trust Co., having
total deposits of $13.2 million, into Liberty National
Bank & Trust Co., with total deposits of $312 million
and 32 offices, will eliminate the competition of the
former and seriously concentrate banking facilities in
the local area served by it.
Commercial banking in the Ninth Banking District
of New York State, in which both of merging banks
are located, is highly concentrated, with the three
largest institutions accounting for 82 percent of the
total assets and 65 percent of all banking offices.
Liberty is the third largest bank in the district, accounting for 12.33 percent of banking assets therein. Since
1945, the number of independent banks in the district
has decreased from 91 to 39. Seven independent
banks have lost their identity through mergers with
Liberty since 1961.
Dunkirk Trust Co. manifests every indication of a
sound institution. Deposits and loans have exhibited
slow but steady growth. Earnings for the past 5
years were satisfactory; 1964 was the bank's secondbest year. Resurgence in the economic life of the community promises opportunity for continued growth.
In view of the sharp decline in the number of banks
serving the ninth district, the importance of retaining
the competitive activity of those remaining becomes
increasingly evident. Elimination of Dunkirk will be
antithetical to that objective and would endanger the
status of the remaining independents.
For the reasons stated herein it is our opinion that
the proposed merger would exert a most serious adverse
effect on competition.
* * *
THE FARMERS BANK, SUNBURY, OHIO, AND THE FIRST NATIONAL BANK OF DELAWARE, DELAWARE, OHIO
Banking offices
Name of bank and type of transaction
Total assets
In operation
The Farmers Bank, Sunbury, Ohio, with
and the First National Bank of Delaware, Delaware, Ohio (243), which had
merged Apr. 30, 1965, under charter and title of the latter bank (243). The
merged bank at the date of merger had
$3,013,975
16,693,489
19, 684, 102
To be operated
1
2
3
73
COMPTROLLER S DECISION
On February 17, 1965, the $17.2 million First National Bank of Delaware, Delaware, Ohio, and the $3.2
million Farmers Bank, Sunbury, Ohio, applied to the
Comptroller of the Currency for permission to merge
under the charter and with the title of the former.
Delaware, with a population of approximately
15,000 persons, is the county seat of Delaware County
and is located 23 miles north of Columbus, Ohio.
Delaware County, which has recently been the site
of oil exploration, is an agriculturally oriented area.
The community of Delaware, on the other hand, contains a number of small industrial firms and provides
a home for Ohio Wesleyan University, with an enrollment of approximately 2,000. Delaware also serves as
a trade center for the surrounding area.
Sunbury is a rural agricultural community with a
population of 1,500 persons located about 12 miles east
of Delaware and 22 miles northeast of Columbus. Although a number of residents commute to work in
Columbus, farming plays the major role in the local
economy.
The charter bank, which has one branch in operation and another branch approved but unopened, is a
subsidiary of BancOhio Corp. Although its policies are
supervised by the parent corporation, the bank's daily
operations are carried out by its own management,
which is considered both competent and aggressive.
The charter bank is a full-service bank with the exception of trust powers.
The merging bank has shown little recent growth.
Its limited lending policy, combined with indifferent
management, has handicapped not only its own expansion but that of the entire community. More through
default than competitive excellence, the only other
financial institution in Sunbury has managed to obtain
nearly 90 percent of the community's banking business,
thus severely unbalancing the local banking structure.
Management of the merging bank appears to reside
solely in its president, who is past retirement age. In
74
addition, none of the other employees are equipped to
assume the responsibility for managing the bank.
Consummation of the proposed merger will have
no effect upon the banking structure in Delaware
County but will redress the totally unbalanced situation in Sunbury. Substitution of a branch of the
charter bank in place of the merging bank will provide
more adequate banking services to the Sunbury community by offering a broad range of consumer, real
estate, and commercial loans. At the same time, because competition between the applicant banks is
minimal and because the merging bank offers no competition to any other financial institution in Delaware
County, the relative competitive positions of the
remaining Delaware County banks will remain
undisturbed.
Applying the statutory criteria to this application,
we find that it is in the public interest and it is,
therefore, approved.
APRIL 20,1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
The First National Bank of Delaware, Delaware,
Ohio, a $17 million bank and a subsidiary of BancOhio
Corp., proposes to acquire by merger the Farmers Bank,
Sunbury, Ohio, a $3 million unit bank 12 miles east of
Delaware.
The competitive impact of the proposed merger
upon the service areas of the two banks is believed to
be less than might appear from the figures relating to
the banks which serve these areas, since the financial
strength of First National is increased by its connection
with the BancOhio Corp. and the competitive vigor
of Farmers Bank is far below that which might be expected from the size of its assets. For these reasons the
direct effect of the proposed merger upon competition
may not be substantially adverse. However, the proposal does constitute another step in the direction of
increased concentration on the part of the dominant
BancOhio Corp. and for this reason may have adverse
competitive implications.
CENTRAL
STATE
BANK,
DALTON,
PA.,
AND THE FIRST
BONDALE, PA.
NATIONAL
BANK
OF
CARBONDALE,
CAR-
Banking offices
Name of bank and type of transaction
Total assets
In operation
Central State Bank, Dalton, Pa., with
and the First National Bank of Carbondale, Carbondale, Pa. (664), which had.
merged Apr. 30, 1965, under charter of the latter bank (664), and under the
title of "First National Bank, Carbondale, Pa." The merged bank at the
date of merger had
COMPTROLLER S DECISION
On February 12, 1965, the $13.9 million First
National Bank of Carbondale, Carbondale, Pa., and
the $3.3 million Central State Bank, Dalton, Pa., applied to the Comptroller of the Currency for permission
to merge under the charter and with the title of the
former.
Established in 1864, the charter First National Bank
maintains its main office in Carbondale. With a
population of 13,500, the city is located some 14 miles
northeast of Scranton in the Appalachian Highland
county of Lackawanna. The depletion of recoverable
anthracite coal deposits in the the area has brought
about a significant change in the economic character
of the Carbondale community from its previous dependence on coal mining. The decline of the mining
industry and allied activities led to severe unemployment and to a marked attrition in the local population.
In recent years, however, energetic local industrial
development programs, combined with Federal stripmining rehabilitation efforts, have injected new and
more broadly diversified income sources into the economy. The leading economic factors in the Carbondale area are now light manufacturing, metal fabrication, and textile processing. The once inordinate
rate of unemployment has been reduced and populationfigureshave stabilized. With continued industrial
development programs, and with implementation of
remedial Federal legislation affecting this segment of
the Appalachian region, the overall economic prospects
for Carbondale are favorable.
In addition to its main office, the charter bank
operates two branches in outlying communities. One
branch is located at Mayfield, a residential development on the periphery of the Carbondale trading area;
the other is located 8 miles southwest of Carbondale
at Archbald, a community which has recently shown
increased industrial activity.
The merging Central State Bank operates its only
office in the Borough of Dalton, a high-income resi-
$3, 343, 595
14,591,454
17,949,035
To be operated
1
3
4
dential area situated 21 miles west of Carbondale and
10 miles northwest of Scranton. The borough has a
modest population of some 1,200 and an economy
which is relatively static. Economic activity is confined largely to dairy farming, and prospects are for
gradual elimination of existing farms in the wake of
demand for prime residential sites. Dalton residents
are, for the greater part, employed in the city of
Scranton. Recent completion of a modern highway
connecting Dalton and environs with the city has insured an increasing integration with the greater metropolitan area.
Consummation of the merger will not eliminate any
competition between the merging institutions inasmuch
as such competition does not now exist.
In Carbondale, banking services are provided chiefly
by the charter bank, by the $8.9 million Liberty Discount & Savings Bank, and by the Carbondale branch
of the Scranton-based $170 million Northeastern
Pennsylvania National Bank & Trust Co. Clearly, the
minor increment in the charter bank's assets resulting
from the merger will neither bring about a measurable
dislocation in this competitive structure nor substantially alter the nature of banking competition in the
communities where the charter bank operates its
branches.
Banking competition in the Dalton area is provided
by the merging bank, the Chinchilla branch of the
$48 million Third National Bank & Trust Co. of
Scraton, located 5 miles to the southeast; the Clark's
Summit branch of the Northeastern Pennsylvania National Bank, located 4 miles to the southeast; and the
$2.2 million First National Bank of Factoryville, located 4 miles to the northwest. The entrance of the
charter bank into the Dalton area will disadvantage
only one bank, viz., the First National Bank of Factoryville, because of its size, and it is our judgment
that the effects of the merger on that institution will
not be adverse.
Applying the statutory criteria to the proposed
75
merger, we find it to be in the public interest and it is,
therefore, approved.
APRIL 23, 1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
First National Bank of Carbondale is located in
Carbondale, Pa., near the city of Scranton. It operates two branches in other towns located in the immediate surrounding area. Central State Bank operates one office in Dalton, Pa. Dalton is also near
FORTY
FORT
STATE
BANK,
FORTY
Scranton, about 21 miles from Carbondale and 20
miles from the nearest branch office of the First National Bank of Carbondale. There appears to be
little, if any, direct competition between these banks
and both banks compete to some degree with larger
banks located in Scranton.
Approval of this proposed merger may further a
trend toward concentration in banking in the Scranton
area. Thus, the effect of the proposed merger on
potential competition might be adverse.
FORT, PA., AND MINERS
WILKES-BARRE, PA.
NATIONAL
BANK
OF WILKES-BARRE,
Banking offices
Name of bank and type of transaction
Total assets
In operation
Forty Fort State Bank, Forty Fort, Pa., with
was purchased Apr. 30, 1965, by Miners National Bank of Wilkes-Barre,
Wilkes-Barre, Pa. (13852), which had
After the purchase was effected, the receiving bank had
COMPTROLLER'S DECISION
On February 19, 1965, Miners National Bank of
Wilkes-Barre, Wilkes-Barre, Pa., applied to the Office
of the Comptroller of the Currency for permission to
acquire the assets and assume the liabilities of Forty
Fort State Bank, Forty Fort, Pa.
Wilkes-Barre, a city of 63,551, is situated approximately 120 miles northwest of Philadelphia in Luzerne
County on the east bank of the Susquehanna River
in the approximate center of the Wyoming Valley.
This area was for many years the heart of the anthracite
industry and the economy of the Wyoming Valley was
based almost entirely on mining. Since 1945, this industry has declined steadily and the area is often regarded as economically depressed despite many efforts
to develop a diversified economy in Wilkes-Barre and
the surrounding region.
Forty Fort is a residential suburb of Wilkes-Barre on
the west side of the Susquehanna River. Two bridges
connect Wilkes-Barre with the west side of the valley.
The area encompassing Wilkes-Barre and Forty Fort is
considered to be a single economic entity.
There are 27 commercial banks with home offices
in Luzerne County, which operate 24 branches within
the county. These banks hold deposits of $440 million
and loans of $273 million. In addition, these banks
must compete with Northeastern Pennsylvania Na76
$14, 134, 289
2
117,734,503
6
130, 665, 231
To be operated
8
tional Bank & Trust Co. which operates three offices
in Luzerne County and whose home office is in Scranton, which is but 18 miles from Wilkes-Barre. The
Scranton-Wilkes-Barre area is considered to be a single
metropolitan area for banking competition.
The acquiring bank operates five branches in
Luzerne County and one at Bloomsburg in Columbia
County, which is located outside the Wyoming Valley
trade area. The selling bank operates one branch in
Willkes-Barre in addition to its home office.
This acquisition and assumption will have little effect upon banking competition in the Wilkes-Barre
service area. It will give the acquiring bank an increase of only 2.6 percent of the deposits and 2 percent
of the loans held by commercial banks in Luzerne
County. Furthermore, the acquiring bank will remain
but half the size of its chief competitor, Northeastern
Pennsylvania National Bank & Trust Co.
The convenience and needs of Forty Fort, as well
as of this entire trade area, will be served by consummation of this acquisition and assumption. Forty Fort
is a well-to-do suburb, many of whose residents desire
trust services which will be offered by the charter
bank's full-trust department and which are not now
available at the selling bank. Also the acquiring bank
will offer more extensive consumerfinancingand lower
interest rates on home mortgage loans.
Applying the statutory criteria to the proposal, we
conclude that it is in the public interest and the application is, therefore, approved.
APRIL 27,
1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
Miners National Bank of Wilkes-Barre, WilkesBarre, Pa., conducts commercial banking through a
main office located in Wilkes-Barre, and through six
branches located in the area outside of Wilkes-Barre.
As of December 31, 1964, it reported total assets of
$117,734,000.
The Forty Fort State Bank, Forty Fort, Pa., conducts
commercial banking through a main office located in
the town of Forty Fort and through a branch office
located in the town of Wilkes-Barre. As of December
31, 1964, it reported total assets of $14,134,000.
If the proposed merger of these two banks is approved serious anticompetitive effects will result since
(1) the banks are in direct competition; (2) the
concentration in banking in Wilkes-Barre and the surrounding environs will increase so that almost 80 percent of the deposits held by banks having offices in
this area will be held by the three largest banks; and,
(3) a continuing trend toward banking concentration
in the Wilkes-Barre area will be furthered.
For the above reasons the proposed merger would
have a significant adverse effect on both present and
future competition.
SHIRLINGTON TRUST CO., INC., ARLINGTON, VA. } AND FIRST & CITIZENS NATIONAL BANK OF ALEXANDRIA,
ALEXANDRIA, VA.
Total assets
Name of bank and type of transaction
Banking offices
In operation To be operated
ShirlingtoaTrust Co., Inc., Arlington, Va., with
and First & Citizens National Bank of Alexandria, Alexandria, Va. (651),
which, had
merged May 3, 1965, under charter of the latter bank (651), and under title
"First & Citizens National Bank." The merged bank at the date of merger
had
COMPTROLLER'S DECISION
On February 26, 1965, Shirlington Trust Co., Inc.,
Arlington, Va., and First & Citizens National Bank of
Alexandria, Alexandria, Va., applied to the Comptroller of the Currency for permission to merge under the
charter of the latter and with the title of "First &
Citizens National Bank."
All offices of the participants are located in Northern
Virginia, directly across the Potomac River from Washington, D.C. The largest portion of the area consists
of the city of Alexandria and the counties of Arlington
and Fairfax.
Alexandria, with a population of 114,000, many of
whom work in Washington, D.C, is both a highincome residential community and an important trade
and industrial center. Products of the area's industrial
plants include electronic components, fertilizers, beverages, chemicals, sewer pipes, and lumber products.
Alexandria is served by 5 railroads and its port
handles more than 100,000 tons of shipping annually.
Arlington County, with a population of 178,000,
is relatively small in area and is largely a residential
$15,313,409
3
97, 278, 025
8
112,591,434
11
community for persons employed in Washington, D.C.
Commercial activities are for the most part confined to
retailing and service outlets.
The charter bank operates eight offices in Alexandria, plus two facilities, one at nearby Fort Belvoir
and one at Washington National Airport. A branch
to be located in the town of Springfield in contiguous
Fairfax County has been approved but not yet opened.
The bank is a subsidiary of United Virginia Bankshares, Inc., a regional bank holding company, and is
the largest bank in Alexandria. Competition in the
city of Alexandria is offered by four other local banks
plus a branch of the largest Arlington County bank.
The merging bank is the 6th largest of 9 banks
serving Arlington County but operates only 3 of the 35
banking offices in the county. While the condition
of the merging bank is considered satisfactory, it has
not shown as favorable growth in deposits as the other
Arlington County banks, has had erratic earnings during the past 6 years, and appears to lack continuity
and depth of management.
The addition of the merging bank to the charter
bank will not significantly alter the charter bank's
77
competitive position in Alexandria. Further, there
will be little elimination of competition between the
two existing banks as common depositors and borrowers are few. Although the closest banking offices of
the participating banks are 1J4 miles apart, the inconvenience of crossing traffic barriers, such as the
Shirley Highway, is a handicap which offsets the comparatively short distance between the two banks.
In Arlington County, a more aggressive resulting
bank will meet competition in the area from the other
Arlington banks and from the Washington, D.G., banks,
as well as from some 37 offices of savings and loan
associations, 47 credit unions, and 50 small loan company offices.
Consummation of the proposed merger will serve
the convenience and needs of the area more adequately
than at present. The increased resources and lending
limit of the resulting bank will better enable it to meet
the credit needs of some of the merging bank's largest
customers. The merging bank does not offer trust
services; the resulting bank will bring to the area a
sizeable and well-established trust department.
Consummation of the proposed merger will serve
to bring needed aggressive management to, and provide depth of management for, the merging bank.
Applying the statutory criteria to the proposed
merger, we conclude that it is in the public interest and
the application is, therefore, approved.
APRIL 30,
1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
First & Citizens is the largest bank in Alexandria
and in the Northern Virginia area with assets of
$94,270,000, deposits $85,934,000, loans and discounts
$49,428,000 and a lending limit of $500,000.
Shirlington Trust is the fifth largest bank in Arlington County with assets of $15,263,000, deposits
$13,500,000, loans and discounts $9,544,000 and a
lending limit of $ 180,000. This bank has experienced
an unsatisfactory growth and earnings record, losses
having been suffered in 2 of the past 6 years and
deposits having been reduced in its last year of
operations.
Because of the heavily traveled arterial highways
separating these two banks direct and vigorous competition between them has probably been somewhat
frustrated.
This merger will enhance First & Citizens' dominant
position in Alexandria. It will also result in the elimination of the largest of the medium-sized banks in
Northern Virginia.
In Arlington County there are three local banks
that have lending limits comparable with First &
Citizens and since Arlington is directly across the
Potomac from Washington, there are five Washington
banks with much greater resources than the Northern
Virginia banks that compete for business in Arlington
County.
The four bank holding companies operating in Virginia, which presently control approximately 25.6 percent of the total deposits of all banks in the State,
would be increased to 25.9 percent. While the increase in concentration of banking represented by the
two mergers above-mentioned are not in themselves
substantial, the cumulative effect of absorbing banks
by bank holding companies is a source of concern to
this Department.
The effect of this proposed merger on competition
will be adverse.
THE NATIONAL SHAWMUT BANK OF BOSTON, BOSTON, MASS., AND CONGRESS NATIONAL BANK OF BOSTON, BOSTON,
MASS.
Name of bank and type of transaction
Total assets
Banking offices
In operation
The National Shawmut Bank of Boston, Boston, Mass. (5155), with
and Congress National Bank of Boston, Boston, Mass. (15509), which had
consolidated May 6, 1965, under charter of the latter bank (15509) and under
title "The National Shawmut Bank of Boston." The consolidated bank at
78
$606, 275, 320
315,394
606,381,496
To be operated
31
1
31
COMPTROLLER S DECISION
On February 11, 1965, the $607.5 million National
Shawmut Bank of Boston, Boston, Mass., and the
organizing Congress National Bank of Boston, Boston,
Mass., applied to the Office of the Comptroller of the
Currency for permission to merge under the charter
of the former and with the title "The National Shawmut Bank of Boston."
The proposed consolidation is a part of the plan
of reorganization of the presently existing bank holding
company group consisting of the National Shawmut
Bank of Boston and Shawmut Association, a Massachusetts business trust and registered bank holding
company which owns controlling interest in 12 banks
operating in the Boston area. The provisions of the
trust's declaration of trust expressly contemplate a
close relationship between the trust and the Shawmut
Bank and, with one exception, trustees have always
been directors or officers of the Shawmut Bank.
Shareholders of the trust have no voting power regarding the selection of trustees, as successor trustees are
appointed by the remaining trustees. Because of its
indirect control of trustees, Shawmut Bank is a registered bank holding company.
The proposed reorganization will convert the trust
into a new holding corporation, Shawmut Association,
Inc., and the assets of the trust will be transferred to
the corporation in exchange for the assumption of the
trust's liabilities by the corporation. There will be a
share-for-share exchange of stock.
Congress National Bank of Boston, which is being
organized for the purpose of this plan, will become a
subsidiary of the holding corporation, and will be
wholly owned, except for directors' qualifying shares.
Congress Bank will then consolidate with the present
Shawmut Bank, the shareholders of which will receive
shares in the holding corporation in exchange for
shares of the present Shawmut Bank. The resulting
bank will be a subsidiary of Shawmut Association,
Inc., and will have the title "The National Shawmut
Bank of Boston."
The reorganization of which this proposed consolidation is a part is a constructive development which
will clarify and make more logical the corporate form
of the holding corporation and its relationship to the
National Shawmut Bank of Boston.
After the reorganization, the shareholders will have
full voting rights in the holding corporation, which
is not the case under the present trust arrangement.
The reorganization is thus in the best interest of the
shareholders of both the Association and Shawmut
Bank, as well as of the general public.
The consolidation will have no effect upon competition.
Applying the statutory criteria to the proposed
consolidation, we conclude that it is in the public
interest and the application is, therefore, approved.
MAY
5, 1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
The proposed consolidation of the Congress National Bank of Boston and the National Shawmut Bank
of Boston, which is the third largest bank in the State
of Massachusetts is one part of an overall plan to rearrange the relationship that has existed for years between the latter and a Massachusetts business trust
(Shawmut Association). Among other assets, this
Association holds controlling stock interests in 12 banks
that operate in the counties (Essex, Middlesex, Norfolk, and Plymouth) surrounding Suffolk County in
which Boston is located. (All but 2 of National Shawmut Bank's 29 branches, as well as its head office, are
in Boston.)
Officers and/or directors of National Shawmut Bank
have always been the trustees of the Association trust.
The executive committee of this bank also has the
right to pass on the appointment or removal of trustees.
In addition, the bank provides many services and facilities to the Association. Thus, the National Shawmut
Bank has for years exercised indirect control over the
Association's affiliated banks and has accordingly been
registered and treated as a bank holding company.
The plan of which this transaction is a part contemplates the organization by the trustees of a new holding
corporation (Shawmut Association, Inc.), to which
would be transferred the assets of the Association.
The newly created Congress National Bank would
become a virtually wholly owned subsidiary of this corporation and would consolidate with National Shawmut Bank, so that the latter would then also be a
subsidiary of said corporation. In this way, control
and ownership of the Association's affiliated banks, as
well as of National Shawmut Bank, would be vested in
Shawmut Association, Inc.
In our opinion the changes to be effected by this
plan would be more of form than of substance. The
close relationship that presently exists between and
among National Shawmut Bank and the Association's
affiliated banks would be clarified and made more cer-
79
tain. The competitive situation presented by this relationship, however, would not appear to be materially
or substantially changed. We, therefore, do not believe
that the proposed reorganization and consolidation,
in and of themselves, pose any serious competitive
problems.
* * *
CANAL NATIONAL BANK, PORTLAND, MAINE, AND THE BATH NATIONAL BANK, BATH, MAINE
Banking offices
Name of bank and type of transaction
Total assets
In operation To be operated
Canal National Bank, Portland, Maine (941), with
and the Bath National Bank, Bath, Maine (494), which had
consolidated May 14, 1965, under the charter and title of "Canal National
Bank." The consolidated bank at date of consolidation had
COMPTROLLER'S DECISION
On March 12, 1965, Canal National Bank, Portland, Maine, and the Bath National Bank, Bath,
Maine, applied to the Office of the Comptroller of
the Currency for permission to consolidate under the
charter and with the title of the former.
Portland, with a population of 72,566, is located
34 miles southwest of Bath in southeastern Maine.
The total population for all communities served by
Canal National Bank is over 212,000. Although there
are a few local industries, Portland is mainly a deepwater port and serves as a distribution point for northern New England.
Bath, with a population of 10,717, is located on the
Kennebec River, and serves an area of 17,000. The
principal industry in Bath is shipbuilding. The population of both Bath and Portland is substantially increased during the summer by vacationers.
The charter bank, which has grown substantially in
recent years, ranks fourth in size among the banking
institutions serving Maine. Its main office, along with
5 of its 16 branches, is located in Portland. The remaining 11 offices are located within a 35-mile radius
of Portland. The charter bank is substantially smaller
than the largest bank in Maine, Depositors Trust Co.,
located in Augusta, as well as First National Bank of
Portland, which is located in Bath. After the consolition is consummated, the resulting bank will still be
much smaller than the two larger banking institutions
in Maine.
The proposed consolidation will result in a bank
better able to meet the needs and serve the interests
of the Bath community and its service area. The improvement in banking services there will be marked
by a larger lending limit than the consolidating bank
80
$62, 780, 659
6, 176,258
18
2
68, 865, 785
20
can offer, as well as by complete fiduciary services. A
large and well trained staff with specialized knowledge of Maine business will also be available.
Although the two banks compete to some extent,
consummation of the proposal will not eliminate any
meaningful competition. On the contrary, the resulting bank should increase competition with other banks
in the area and improve banking services to the
communities.
Applying the statutory criteria to the proposed consolidation, we conclude that it is in the public interest,
and the application is, therefore, approved.
MAY
12, 1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
The proposed consolidation seeks to bring together
Canal National Bank, southeastern Maine's fourth
largest bank with deposits of $56,329,000 and 17 offices
in Portland and surrounding communities, and the
Bath National Bank, a smaller independent bank with
2 offices, 1 each in Bath and Boothbay Harbor, and
deposits of $6,124,000. Canal National now operates
a branch in Brunswick 8 miles from Bath National's
main office and competitive with it.
The consolidation will eliminate the existing and
potential competition between Canal's Brunswick
branch and Bath National. It will eliminate the last
independent bank from the Bath-Brunswick area. It
represents one further step in the present march toward
concentration of southeastern Maine's commercial
banking in the hands of a few large chain banks and
the eventual total elimination of independent banks
from the area. For these reasons we conclude that
the effects of the proposed consolidation on competition will be adverse.
MARTIN STATE BANK, MARTIN, MICH., AND THE FIRST NATIONAL BANK & TRUST CO. OF KALAMAZOO,
KALAMAZOO, MICH.
Banking offices
Total assets
Name of bank and type of transaction
In operation
Martin State Bank, Martin, Mich., with
was purchased May 22, 1965, by the First National Bank & Trust Co. of
Kalamazoo, Kalamazoo, Mich. (191), which had
After the purchase was effected, the receiving bank had
COMPTROLLER'S DECISION
On February 5, 1965, the First National Bank &
Trust Go. of Kalamazoo, Kalamazoo, Mich., applied
to the Comptroller of the Currency for permission to
purchase the assets and assume the liabilities of the $3.4
million Martin State Bank, Martin, Mich.
Kalamazoo, located in the southwest part of lower
Michigan, has an estimated population of 85,000. It
is a well-diversified, balanced community deriving
economic support from industry, education, and agriculture. The principal industries are paper manufacturing and pharmaceuticals, with the Sutherland Paper
Co. and Upjohn Co. each employing in excess of 3,000
persons. In addition to the more than 50 diversified
industries in the area, a new General Motors Fisher
Body plant now under construction is expected to employ 3,500 persons within a year.
Martin, located 19 miles to the north of Kalamazoo,
is a small agricultural community with a population of
560. There are over 20 businesses in the village area
and about 10 farming-related industries and wholesale establishments. The village is assuming some of
the characteristics of a residential community for
people employed in other areas, and present plans for
the construction of a new $800,000 high school should
have a stimulating effect on the local economy.
The purchasing bank operates a main office and 7
branches in Kalamazoo, and 13 additional offices in
communities ranging from 5 to 25 miles from the main
office. There are 22 commercial banks in Kalamazoo,
with chief competition furnished by the $97.4 million
American National Bank & Trust Co. of Kalamazoo,
with 11 branches; and the $49.2 million Industrial
State Bank of Kalamazoo, operating 13 branches. All
the major banks maintain active new business solicitation departments and the fact that competition is
extremely keen is evidenced by the almost immediate
increase of interest rates to the maximum permitted
after their recent relaxation. Additional competition
$3, 578, 387
1
144, 927, 988
148,452, 098
21
To be operated
22
is offered by savings and loan associations, which hold
share accounts in excess of $150 million; several prominent insurance companies, which actively solicit real
estate mortgages; credit unions; sales finance and personal loan companies; and lending agencies of the U.S.
Government.
The selling bank does not operate any branches or
a trust department. Martin State, serving a trade area
of approximately 4,000 persons, is the only bank in
Martin but 3 other banks, including the purchasing
bank, operate within a 12-mile perimeter. The most
active competition for banking business in the area is
provided by a branch of American National Bank &
Trust Co. of Kalamazoo, located in Plainwell, 6 miles
to the south, and the $8 million Wayland State Bank,
11 miles to the north.
The community will also benefit from the increased
services of the purchasing bank. Martin State is a
limited service bank, with a legal lending limit of
$40,000 which is inadequate to meet the needs of the
larger grain elevators and industries in the area. The
purchasing bank is better able to serve this community,
both in size of loans and by supplying a complete line
of banking services, includingfiduciaryand installment
lending facilities, that are sorely needed and presently
unavailable.
It does not appear that the effect of the proposed
transaction on competition in the area will be significantly adverse as existing competition between the two
applicant banks is minimal indeed.
Applying the statutory criteria to the proposed
purchase of assets and assumption of liabilities, we find
that this proposal is in the public interest and it is,
therefore, approved.
APRIL 9, 1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
Martin State is the only bank in Martin, a farm community of 560. It competes with another bank of
81
comparable size and with branches of First National,
the largest, and American National Bank of Kalamazoo, the second largest bank in southeast Michigan all
operating offices (seven) at five different locations
within a radius of 12 miles of Martin.
The argument that the proposed acquisition would
better serve the needs of the community is not convincing since Martin's banking requirements are limited to
begin with, and it already has the benefit of the added
banking facilities of the banks just mentioned. There
is no merit seen in representations that an aging management wishing to retire is justification for the acquisi-
tion. The law makes no such concession to personal
expediency.
The proposed acquisition, then, is viewed as leading
to further concentration of banking power in the general area, a condition to which First National itself
has already contributed by past acquisitions. The
takeover of Martin State by First National would be
minor, but in the circumstances any accretion by First
National becomes significant. United States v. Philadelphia National Bank, 374 U.S. 321 (1963). So
viewed, the proposed acquisition in its potential effects
is anticompetitive.
THE SANDBORN BANKING CO., SANDBORN, IND., AND THE AMERICAN NATIONAL BANK OF VINCENNES, VINCENNES,
IND.
Banking offices
Name of bank and type of transaction
Total assets
In operation To be operated
The Sandborn Banking Co., Sandborn, Ind., with
and the American National Bank of Vincennes, Vincennes, Ind. (3864),
which had
merged May 26, 1965, under the charter and title of the latter bank. The
merged bank at the time of merger had
COMPTROLLER'S DECISION
On March 19, 1965, the $29.5 million American
National Bank of Vincennes, Vincennes, Ind., and the
$1.9 million Sandborn Banking Co., Sandborn, Ind.,
applied to the Comptroller of the Currency for permission to merge under the charter and title of the
former.
Vincennes, the county seat of Knox County, is located approximately 115 miles southwest of Indianapolis in southwestern Indiana. The city's population
declined from 18,834 to 18,046 during the period
from 1950 to 1960. The area depends primarily for
support on farming, although there are several major
industries that also contribute substantially to the
economy.
The banking needs of the Vincennes trading area are
served by the charter bank and the $19.5 million Security Bank & Trust Co., Vincennes.
The village of Sandborn, population 700, is located
29 miles northeast of Vincennes, and like the rest of
Knox County, the economy is primarily supported by
diverse agricultural pursuits. The small merging bank
is the only bank in Sandborn.
The consummation of the proposed merger will provide Sandborn with more satisfactory banking services.
82
$1,803,743
1
27, 662, 668
2
29, 379, 168
3
The introduction of more realistic lending practices in
the Sandborn service area should attract a considerable volume of farm crop loans, real estate mortgage
loans, and loans for livestock feeding operations not
now provided by the merging bank. At present, the
lending policies of the Sandborn bank are most selective, as loans and discounts represent only 16 percent of
deposits.
Competition between the two institutions has been
nonexistent. The applicant banks are located 29 miles
apart and there are no common customers. No competition will, therefore, be eliminated by the merger.
The most critical problem which the merging bank
faces is the impending retirement of its only executive
officer, who is beyond normal retirement age. There
are no prospects for such a small bank to retain an
adequate replacement. The merger is a salutary solution to this problem.
Applying the statutory criteria to the proposed
merger, we conclude that it is in the public interest and
the application is, therefore, approved.
MAY 24,1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
In Knox County, Ind., the acquiring bank, with 62
percent of deposits, and Security Bank & Trust Co. of
Vincennes, with 38 percent, would be the sole survivors of 19 banks formerly competing in the market—
most disappearing through merger with the 2 survivors.
If this merger is approved, a duopoly of banking
activity, would be imposed on Knox County, Ind.
The impact of the proposed merger on competition
is clearly adverse.
THE HOME STATE BANK OF LAWRENCE, LAWRENCE, MICH., AND THE AMERICAN NATIONAL BANK & TRUST CO.,
OF KALAMAZOO, KALAMAZOO, MICH.
Banking offices
Total assets
Name of bank and type of transaction
In operation To be operated
The Home State Bank of Lawrence, Lawrence, Mich., with
was purchased June 1, 1965, by the American National Bank & Trust Go. of
Kalamazoo, Kalamazoo, Mich. (13820), which had
After the purchase was effected, the receiving association had
COMPTROLLER'S DECISION
On March 4, 1965, the American National Bank &
Trust Co. of Kalamazoo, Kalamazoo, Mich., applied
to the Office of the Comptroller of the Currency for
permission to acquire the assets and assume the liabilities of the Home State Bank of Lawrence, Lawrence,
Mich.
Kalamazoo, with a rapidly growing population now
in excess of 85,000, is located in southwestern Michigan, midway between, and 140 miles from, Chicago
and Detroit. Included among 11 nationally known
industrial firms with home offices or branches located
in this city are a major paper company, a large
pharmaceutical firm, and, in the near future, an automobile body plant which will employ 3,500 people.
In addition, Kalamazoo is a cultural and educational
center with over 14,000 students attending 3 colleges
and universities within the city. With unemployment
below 3 percent and with forward-looking leadership,
this area possesses an extremely healthy economic
outlook.
Lawrence, a small farming community, is a trading
center for over 10,000 people. It is located approximately 25 miles west of Kalamazoo. Except for
seasonal fruit processing and freezing operations, there
is virtually no industry within the community.
The acquiring bank operates eight offices in Kalamazoo, and one each in Allegan Plainwell, Portage,
and Richland. None of the branches or offices is less
than 24 miles from Lawrence. The selling bank, with
$2.5 million in assets, operates only one office and there
$2, 383, 464
1
109, 179,911
111,515,811
12
J3
is no overlap in service areas between it and the
purchaser.
The transaction will scarcely affect the competitive
position of the acquiring bank, as it will still be in
second place in the Kalamazoo area behind the First
National Bank & Trust Co. of Kalamazoo.
The purchase will greatly expand the lending limits
now provided by the selling bank. The seasonal industries within the Lawrence area will not have to
seek larger city banks to meet their local lending needs.
Furthermore, numerous bank services, such as trust
department, consumer credit, check-credit loans, and
bank-by-mail service, will be offered to the Lawrence
service area. The convenience and needs of this area
will thus be better met.
Applying the statutory criteria to the proposal, we
conclude that it is in the public interest and the application is, therefore, approved.
MAY 18, 1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
American National Bank & Trust Co. of Kalamazoo,
Kalamazoo, Mich., with 11 branches and total assets
of $96,565,000 proposes to purchase the assets and
assume the liabilities of the Home State Bank of
Lawrence, Mich., with total assets of $2,571,000.
The proposed acquisition by American represents
another step toward absorption of independent banks
in the area by three Kalamazoo banks of which American is second largest and which, by merger or by
branching, have penetrated the banking structure of
small communities. The merger would eliminate an-
83
other small bank, jeopardize the capability of three
banks similar in size in the Lawrence area to offer
effective competition against American's superior resources and facilities and encourage a concentration
of banking which has already made inroads in the
general service areas of the Kalamazoo banks.
We conclude, therefore, that the proposed acquisition would have an adverse effect on competition.
THE BANK OF BASIL CO., BALTIMORE, OHIO, AND THE FAIRFIELD NATIONAL BANK OF LANCASTER, LANCASTER
OHIO
Banking offices
Total assets
Name of bank and type of transaction
In operation
The Bank of Basil Co., Baltimore, Ohio, with
was purchased June 5, 1965, by the Fairfield National Bank of Lancaster,
Lancaster, Ohio (7517), which had
After the purchase was effected, the receiving bank had
COMPTROLLER'S DECISION
On April 12, 1965, the $16.5 million Fairfield National Bank of Lancaster, Lancaster, Ohio, applied to
the Office of the Comptroller of the Currency for permission to acquire the assets and assume the liabilities
of the $1.7 million Bank of Basil Co., Baltimore, Ohio.
Lancaster, located 30 miles southeast of Columbus,
is the county seat of Fairfield County. The 30,000
inhabitants of the city are largely dependent on manufacturing, with dairy farming, livestock and general
farming also playing an important role in the local
economy. The Anchor Hocking Glass Corp., employing 4,100 persons, and the Lancaster Glass Co., employing 830 persons, are the employment leaders among the
50 industrial plants in the area.
Baltimore, population 2,200, is located 10 miles
north of Lancaster. A papermill employing 500 persons is the principal industry in an otherwise agricultural area of large dairy farms. The trend is toward
increasing commercial and residential development in
Baltimore, with many of its residents commuting to
Columbus or Lancaster for employment.
There are 10 banks in Fairfield County, 4 of which
are located in Lancaster. Competition is furnished
the acquiring bank by the $17.7 million Farmers &
Citizens Bank, the $12.8 million Hocking Valley National Bank, and the $6.9 million Lancaster National
84
$1, 716, 786
1
15, 365, 592
16,966,510
1
To be operated
2
Bank. Competition is also provided by two local
savings and loan associations with assets of $26.7 and
$20.4 million.
The effect of the proposed transaction on competition will be minimal as there is presently no significant
competition between the applicant banks. No adverse
effect on competition can be foreseen.
Applying the statutory criteria to this proposal, we
conclude that the proposed acquisition of assets and
assumption of liabilities is in the public interest and it
is, therefore, approved.
MAY
24, 1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
The Fairfield National Bank, Lancaster, Ohio, the
second largest bank in the Lancaster area, proposes to
acquire the assets and to assume the liabilities of the
Bank of Basil Co., approximately 10 miles to the north
in Baltimore, Ohio. Neither of the two banks has
any branch office nor any history of mergers or acquisitions. Basil Bank, with a lending limit of $11,500,
competes with First National Bank, Baltimore, Ohio,
which has a substantially higher lending limit.
Though the proposed transaction may lead to some
inroads upon the banking business of First National
Bank in Baltimore, it is not believed that the overall
effect upon competition will be substantially adverse.
THE ROSSFORD SAVINGS BANK, ROSSFORD, OHIO, AND THE NATIONAL BANK OF TOLEDO, TOLEDO, OHIO
Banking offices
Name of bank and type of transaction
Total assets
In operation To be operated
The Rossford Savings Bank, Rossford, Ohio, with
and the National Bank of Toledo, Toledo, Ohio (14586), which had
merged June 7, 1965, under charter of the latter bank (14586), and under
title of "First National Bank of Toledo." The merged bank at the date of
merger had
COMPTROLLER'S DECISION
On March 22, 1965, the National Bank of Toledo,
Toledo, Ohio, and the $19 million Rossford Savings
Bank, Rossford, Ohio, applied to the Office of the
Comptroller of the Currency for permission to merge
under the charter of the former and with the title
"First National Bank of Toledo."
Toledo, population 332,000, is located on the western
edge of Lake Erie in northwestern Ohio. Toledo is
the apex of a heavy industrial manufacturing complex and also serves as an important trading center. It
is the principal glass producing city in the United States
and, since the completion of the St. Lawrence River
Seaway in 1959, it has become the ninth ranking port in
terms of freight tonnage which passes through it.
Rossford, population 4,406, is a village situated
within the Greater Toledo metropolitan area. It is
contiguous with the corporate limits of Toledo. Recently, the conversion of the Rossford Ordnance Depot
into an industrial park has attracted into Rossford
new industry which should increase the economic activity there.
The National Bank of Toledo is an aggressive, wellmanaged, and well-capitalized bank providing a full
range of commercial banking services to its customers
in the Toledo metropolitan area and the surrounding
trade region. As the third largest bank in the Toledo
metropolitan area, however, it experiences competition from the dominant Toledo Trust Co., which holds
approximately half of all bank assets in this area, and
also from the Ohio Citizens Trust Co.
The merging bank's service area is confined mainly
to the village of Rossford. The merging bank does
not have the capacity or experience tofinancesubstantial industrial activity. Moreover, three of its ex-
$19,519,810
139,068,265
14
158,588,075
15
ecutive officers have reached retirement age and a
management problem may, therefore, arise.
The village of Rossford will be especially benefited
by this merger. The charter bank's strong management will solve the merging bank's management succession problem. All of the charter bank's services will
be available to the industrial and commercial firms in
Rossford. The resulting bank will, in addition, provide the service of a full trust department.
Applying the statutory criteria to the proposed
merger, we conclude that it is in the public interest and
the application is, therefore, approved.
JUNE 4,1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
This is a proposal to merge the third largest bank in
Toledo with a profitable independent bank in Rossford,
across the Maumee River from Toledo.
Lucas County, in which Toledo is located, has six
commercial banks, three of which hold about 90 percent of the banking resources of the county. This
merger would add to the size of one of Lucas County's
dominant banks; the charter bank would increase in
rank from third to second in deposits in Toledo.
The proposed merger would eliminate present and
prospective competition between the merging banks.
It would increase the competitive pressure on several
smaller banks which compete with the merging bank.
Finally, the independent merging bank, which has
shown considerable growth in recent years, would be
eliminated as a competitor.
For these reasons, it is our opinion that the proposed merger would have a serious adverse effect on
competition in commercial banking in the ToledoRossford region.
85
T H E NATIONAL BANK OF SANFORD, SANFORD, N . C ,
AND SOUTHERN NATIONAL BANK OF N O R T H CAROLINA^
LUMBERTON, N.C.
Banking offices
Name of bank and type of transaction
Total assets
In operation
The National Bank of Sanford, Sanford, N.C. (13791), with
and Southern National Bank of North Carolina, Lumberton, N.C. (10610),
which had
merged June 12, 1965, under charter and title of the latter bank (10610). The
merged bank at the date of merger had
COMPTROLLER S DECISION
On April 13, 1965, the National Bank of Sanford,
Sanford, N.C, and Southern National Bank of North
Carolina, Lumberton, N.C, applied to the Office of
the Comptroller of the Currency for permission to
merge under the charter and with the title of the latter.
Sanford, with a population of 16,000, lies near the
center of the State in a primarily industrial area which
has been growing rapidly in recent years. Its 50
plants employing more than 6,000 people produce a
variety of products, which include lumber, brick, tile,
textile machinery, and electronic equipment. Much
of the surrounding area is devoted to the agricultural
production of such items as tobacco, corn, soybeans,
and livestock. Lillington, the location of Sanford National's only out-of-town branch, is 23 miles southeast
of Sanford, has a population of 1,242, and is both industrial and agricultural in its orientation.
Lumberton has a population of 19,000 and is located in the south-central part of the State in a primarily rural area devoted principally to the production
of tobacco and corn. Other areas served by the bank
and its branches are noted for their industry, their
resorts, and Fort Bragg, described as the largest land
area military reservation in the United States and
located at Fayetteville.
The merging bank, with resources of $16 million,
has 4 offices, 3 of which serve the community of Sanford and the surrounding area. The other is located
in Lillington, which lies 23 miles east of Sanford.
Competition in the Sanford area is afforded by 2
branches of the $13 million Central Bank and Trust
Co., headquartered in Broadway, N.C, 10 miles from
Sanford. Two savings and loan associations with resources of $13 million and $15 million, respectively,
also compete in Sanford, while the bank's Lillington
office competes with the $4 million Bank of Lillington.
The charter bank operates 18 offices in 11 cities
and communities, all within 55 miles of its head office
86
$14, 768, 193
4
49, 204, 143
18
63, 706, 449
To be operated
22
at Lumberton, and has been expanding rapidly in
recent years. It competes with a number of banks in
the areas which it serves including branches of the
First-Citizens Bank & Trust Co. and Branch Banking
& Trust Co., both of which are located in Fayetteville,
N.C It competes also with a number of larger North
Carolina banks, whose correspondents solicit loans and
deposits in the areas served by Southern National, as
well as other financial institutions.
The principal effect of the merger will be to provide
badly needed additional banking services in the rapidly
growing Sanford area. Consummation of the proposal will provide an increased lending limit of approximately $600,000 over the presently existing $75,000
limit of the merging bank. In addition, it will introduce a full-time trust department, and a farm and
forestry service department.
The merger appears to be the solution to several
serious problems of the merging bank, including inadequate capitalization, and lack of management succession. It will permit the charter bank to diversify its
operations by introducing it into a primarily industrial
area.
As the closest offices of the merging banks are 30
miles apart, the proposed merger will have little effect
on competition between them. Competition between
the charter bank and its competitors will also be little
affected, as the principal consequences of the merger
will be felt in the Sanford area. Effects on competition in the Sanford area will be minimal, also as that
area, described by the North Carolina Department of
Conservation and Development as one of the fastest
growing in the State, should continue to afford plenty
of room for the operation and expansion of any competing bank.
Applying the statutory criteria to the proposed
merger, we conclude it is in the public interest and the
application is, therefore, approved.
JUNE 10,
1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
National Bank of Sanford, which has 3 offices located in Sanford and 1 in Lillington, N.C., has total
assets of $16,029,000, total deposits of $14,667,000, net
loans and discounts of $8,827,000, and total capital
accounts of $789,000.
Southern National, with 18 offices located throughout the southern portion of central North Carolina,
has total assets of $57,215,000, total deposits of $50,083,000, net loans and discounts of $32,590,000, and
total capital accounts of $4,937,000.
Since the merging banks appear to serve separate
areas, the principal anticompetitive effect of the proposed merger would lie, not in the elimination of competition between them, but in the increase in the dominant position which each already enjoys in its own
service area. In the Sanford service area, we believe
the considerations are much the same as those enunciated by your office in 1962 in denying an application
by Southern National to merge with the Bank of Lillington on the ground that such merger would be
detrimental to the banking structure of the area and to
National Bank of Sanford. In the area served by
Southern National, we believe the 29 percent increase
in its size which would result from the merger would
likewise be detrimental to smaller competing banks.
In addition, approval of the proposed merger would
serve to perpetuate the trend toward concentration
through merger which has existed in North Carolina
for several years.
The effect of the proposed merger on competition
would be adverse.
THE FIRST NATIONAL BANK OF PETERSBURG, PETERSBURG, PA., AND UNION NATIONAL BANK & TRUST CO. OF
HUNTINGDON, HUNTINGDON, PA.
Banking offices
Total assets
Name of bank and type of transaction
In operation To be operated
The First National Bank of Petersburg, Petersburg, Pa. (10313), with
and Union National Bank & Trust Co. of Huntingdon, Huntingdon, Pa.
(4965), which had
merged June 16, 1965, under charter and title of the latter bank (4965).
The merged bank at the date of merger had
COMPTROLLER S DECISION
On February 23, 1965, the $14.6 million Union
National Bank & Trust Co. of Huntingdon, Huntingdon, Pa., and the $1.3 million First National Bank of
Petersburg, Petersburg, Pa., applied to the Comptroller of the Currency for permission to merge under
the charter and with the title of the former.
Huntingdon, with a population of 7,400, is the
largest town and major trading center in Huntingdon
County, population 39,500. A local movement to entice small industries into the area has met with reasonable success and, while a more diversified economy
is now being formed, the major economic factor remains the agrarian pursuits conducted in the surrounding area.
Petersburg, with a population of 560 serving an estimated rural community of 2,000, is 12 miles northwest
of Huntingdon and serves as a trading center for local
farmers. Neither the town's population nor the merging bank has grown in recent years.
The proposed merger will provide more complete
$1,250,005
1
15,025,808
3
16,275,813
4
banking services for the Petersburg area by offering
trust services and a larger lending limit. The managerial staff of the charter bank will provide additional
management personnel who will supplement the
limited staff of the merging bank.
The competition existing between the applicant
banks is not significant as the merging bank is separated from the charter bank by rugged terrain. The
merging bank, controlling less than 2 percent of the
deposits and loans in the county, is the smallest of nine
banks there.
Applying the statutory criteria to the proposed
merger, we conclude that it is in the public interest and
it is, therefore, approved.
JUNE 10, 1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
Under the proposed merger agreement the First National Bank of Petersburg with assets of $1,136,000 is
to be merged into the Union National Bank & Trust
Co. of Huntingdon with assets of $14,654,000.
87
First National is located in the town of Petersburg
which has a population of 650 and is approximately 10
miles from the main office of Union. Union is located
in the town of Huntingdon which has a population of
7,500. First National is the only bank in Petersburg
and Union is the second largest bank in the town of
Huntingdon. Union's head office is in Huntingdon
and it has a drive-in office next to its main office. It
also operates a branch in the town of Mount Union
which has a population of 4,091.
The merger will eliminate only a very limited
amount of direct competition between Union and First
National, since First National serves primarily customers located in Petersburg and the immediately surrounding area. The merger does not appear to have
an adverse effect upon potential competition. Because
of the very small size of Petersburg it is unlikely that
any new bank will open in the town in the foreseeable
future.
Although the proposed merger would increase concentration in the banking industry in Huntingdon
County to a small degree, we have concluded that the
overall effect on competition would not be significantly
adverse.
COUNTY NATIONAL BANK OF LONG ISLAND, MINEOLA, N.Y., AND VALLEY NATIONAL BANK OF LONG ISLAND,
VALLEY STREAM, N.Y.
Banking offices
Total assets
Name of bank and type of transaction
In operation To be operated
County National Bank of Long Island, Mineola, N.Y. (14951), with
and Valley National Bank of Long Island, Valley Stream, N.Y. (11881),
which had
merged June 21, 1965, under charter and title of the latter bank (11881).
The merged bank at the date of merger had
COMPTROLLER'S DECISION
On June 18, 1965, the Valley National Bank of
Long Island, Valley Stream, N.Y., and the County
National Bank of Long Island, Mineola, N.Y., applied
to the Comptroller of the Currency for permission to
merge under the charter and with the title of the
former.
Upon the facts presented and otherwise known to
this Office, it is found that this Office must act immediately with respect to this application. Accord-
$9, 245, 078
2
123, 025, 379
17
132,270,456
19
ingly, the reports of competitive factors provided for
by the seventh sentence of 12 U.S.C. 1828 (c) are
waived.
Because of the nature of this situation, and in order
to protect the depositors, creditors, and shareholders
of the County National Bank of Long Island, the application to merge is hereby approved, said merger to
be effected upon the close of business Monday, June 21,
1965.
JUNE 21, 1965.
THE FIRST NATIONAL BANK OF HIGHLAND PARK, HIGHLAND PARK, N.J., AND FIRST BANK & TRUST CO., NATIONAL
ASSOCIATION, FORDS, N.J.
Name of bank and type of transaction
Total assets
Banking offices
In operation
The First National Bank of Highland Park, Highland Park, NJ. (12598) with...
and First Bank & Trust Co., National Association, Fords, NJ. (15255),
which had
consolidated June 25, 1965, under charter and title of the latter bank (15255).
$22,646,413
3
85,454, 570
6
108, 108, 070
To be operated
9
COMPTROLLER'S DECISION
On April 30, 1965, First Bank & Trust Co., National
Association, Fords, N.J., with $67.4 million in IPG
deposits, and the First National Bank of Highland
Park, Highland Park, N.J., with $18 million in IPG
deposits, applied to the Office of the Comptroller of the
Currency for permission to consolidate under the charter and with the title of the former.
Both banks are located in Middlesex County,
which is about 25 miles from New York City. The
charter bank has its heaquarters in Fords, population
7,000, and has 4 branches in Woodbridge Township,
population 93,000. The township, a diversified residential and industrial community, is one of the fastest
growing sections of the county. Highland Park is the
main office of the consolidating bank and is a residential town of some 12,000 located on the outskirts of
the much larger city of New Brunswick.
First Bank & Trust Co., National Association, a
full-service bank, is the largest of 20 commercial banks
in Middlesex County. It is far from dominant, however, as it presently holds only 17.4 percent of deposits
and 19.6 percent of loans. When the resources of
the two highly competitive savings banks in the county
are considered, the resulting bank will hold only 16.7
percent of deposits and 14.8 percent of loans.
Competition between the applicant banks is minimal. The nearest offices are 4.5 miles apart. Between
these offices there are four offices of four different
commercial banks. A graphic illustration of the lack
of competition is the fact that the applicant banks
have no common borrowers or depositors.
The principal reason for this consolidation is the
need of the consolidating bank to find new management. The president is past the retirement age and,
due to poor health, is unable to participate actively
in the bank's affairs. There is no successor management wthin the bank and attempts to secure management outside the bank have been unsuccessful.
The convenience and needs of the community will
be served by the consolidation because of additional
226-601—67-
services which the charter bank can provide for the
consolidating bank's customers. At present, the consolidating bank does not have trust powers; the charter
bank has an active trust department. The charter
bank will bring expertise in such fields as automobile
financing, home modernization loans, and personal
loans to the customers of the consolidating bank. The
resulting bank will, in addition, realize significant savings through the operation of the charter bank's computer and other operational equipment. A larger
lending limit of the resulting bank arising from the
consolidation will put the banks in a better position to
serve the expanding industrial and commercial needs
of one of the fastest growing counties in New Jersey.
Applying the statutory criteria, we conclude that the
consolidation is in the public interest and it is, therefore, approved.
JUNE 25,
1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
First Bank & Trust Co. is the largest bank in Middlesex County, N.J. One of its five branch offices is located only about 4.5 miles from a branch office of the
First National Bank of Highland Park, N.J., the seventh largest bank in the county, which it seeks to acquire. The present competitive climate in the commercial banking business in Middlesex County would
appear to be favorable with no single bank having an
unduly large share of the business. Should this application be approved, however, some existing competition between the participating banks would be eliminated. In addition, First Bank & Trust Co.'s share
would increase to almost one-fourth of the total banking business in the county, much of it having been acquired through the instant merger and the acquisition
of a bank of similar size about 1 year ago. The presently favorable competitive climate in Middlesex County, N.J., would be impaired. We, therefore, believe
approval of this application would have an adverse
effect on competition.
89
THE CITIZENS TRUST CO. OF SCHENECTADY, SCHENECTADY, N.Y., AND NATIONAL COMMERCIAL BANK & TRUST
Co., ALBANY, N.Y.
Banking offices
Total assets
Name of bank and type of transaction
In operation
The Citizens Trust Co. of Schenectady, Schenectady, N.Y., with
and National Commercial Bank & Trust Co., Albany, N.Y. (1301), which
had
merged June 25, 1965, under charter and title of the latter bank (1301). The
merged bank at the date of merger had
COMPTROLLER'S DECISION
On April 19, 1965, the $490 million National Commercial Bank & Trust Co., Albany, N.Y., and the
$50 million Citizens Trust Co., Schenectady, N.Y.,
applied to the Office of the Comptroller of the Currency for permission to merge under the charter and
with the title of the former.
Albany, located in northeastern New York, is the
State capital. It has a population of 130,000 and
serves as the financial center of an area which numbers
about 700,000 persons. Although Albany is an economically diversified city, it is particularly known as
a major commercial center for the New England States
by virtue of an excellent highway system, major rail
connections, and harbor facilities on the Hudson River.
A deepening of the channel to New York City, scheduled for completion next year, will increase shipping
volume and hence industrial activity.
Schenectady, situated about 15 miles northwest of
Albany, has a population of 81,000. The city, which
serves as the commercial center for 250,000 persons,
derives its economic support from heavy capital goods.
The city is substantially dependent upon a plant of the
General Electric Co., which employs about 22,000,
and, to a lesser degree, upon Alco Products, a division
of Worthington Corp. Both operations tend to be
cyclical, but with the $60 million General Electric
expansion now underway, the economic outlook for
the community is favorable.
The charter bank operates 42 offices, 19 in Albany
and the remainder throughout the Fourth Banking
District of New York. It has followed an aggressive
policy of expansion by merger and by de novo branching in order to achieve competitive balance with the
other two large banks in Albany, the State Bank of
Albany and the First Trust Co. of Albany.
The merging bank's one branch office is in Schenectady. Among the commercial banks there, the merging bank ranks third in size behind the $105 million
90
$46,911, 148
2
482,467,478
48
To be operated
529, 166, 891
50
Schenectady Trust and the $57 million Mohawk National Bank of Schenectady. The city is also served by
the much larger $207 million Schenectady Savings
Bank.
The merger will bring to Schenectady the facilities
of a substantial bank and increase competition with
the three local banking institutions which are now
larger than the merging bank. The invigorated competition will provide both an energetic stimulus and
stabilizing influence to Schenectady's cyclical economy.
The staff of the charter bank will provide additional
management personnel who will supplement the
limited management staff of the merging bank.
The competition existing between the applicant
banks is not significant, as the closest offices of the two
banks are separated by a distance of 7 miles.
Applying the statutory criteria to the proposed
merger, we conclude, that it is in the public interest
and it is, therefore, approved.
JUNE 24,1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
The National Commercial Bank & Trust Co. is
the largest bank in Albany in terms of loans, and a
close second in terms of assets and deposits. It has
41 branches, 18 in the immediate Albany area and
the remainder scattered throughout the Fourth Banking District of New York, the area to which its operations are limited by law. It has no branches in
Schenectady but does have branches in a number of
surrounding towns. The Citizens Trust Co. of Schenectady operates a main office and one branch, both
in Schenectady, about 10 to 15 miles from Albany,
and within the fourth banking district. Citizens Trust
of Schenectady is the third largest bank in Schenectady and is a profitable and effective competitor in
the banking business of that city.
Since 1952 National Commercial Bank & Trust Co.
of Albany has been engaged in a campaign of mergers
and acquisitions, absorbing 16 independent institutions with a total of 21 offices. These mergers account
for between 20 and 25 percent of National Commercial
Bank & Trust Co.'s present size. In this same period
State Bank of Albany, the principal rival of National
Commercial Bank & Trust Co., has acquired 10 banks
and its application has been denied on 2 others. This
merger activity has enabled the two principal Albany
banks to race for primacy in the fourth banking district, and meanwhile expanding to a point where they
account for over 86 percent of the banking resources
in Albany, with the remainder being divided among
only three institutions.
In view of this extensive history of mergers and
acquisitions and the concentration it has already
created, if this trend of mergers and acquisitions is
not halted, the continued existence of an independent
and adequately fragmented banking system in the
Fourth Banking District of New York will be seriously
jeopardized. Accordingly, the proposed merger, if
approved, would appear to have a seriously adverse
effect on competition.
FIRST NATIONAL BANK OF LELAND, LELAND, MISS., AND THE COMMERCIAL NATIONAL BANK OF GREENVILLE,
GREENVILLE, MISS.
Total assets
Name of bank and type of transaction
Banking offices
In operation To be operated
First National Bank of Leland, Leland, Miss. (15215), with
and the Commercial National Bank of Greenville, Greenville, Miss. (13403),
which had
merged July 2, 1965, under the charter and title of the latter bank (13403).
The merged bank at the date of merger had
COMPTROLLER'S DECISION
On May 10,1965, the First National Bank of Leland,
Leland, Miss., and the Commercial National Bank
of Greenville, Greenville, Miss., applied to the Office
of the Comptroller of the Currency for permission to
merge under the charter and with the title of the
latter.
Leland, with a population of 7,000, lies 8 miles east
of Greenville in Washington County, in which it is the
second largest city. Many of the citizens in Leland
are employed in Greenville, where they commute
daily. Although primarily a residential community,
Leland does have a thriving retail business district.
Greenville has a population of 47,000 and is the
county seat of Washington County. It is the fourth
largest city in Mississippi and is located on the Mississippi River, 150 miles south of Memphis, Tenn., and
125 miles north of Jackson, Miss. The natural trading center for a primary service area of an approximately 50-mile radius which includes most of Washington County, Greenville has an economy based
primarily on industrial activity, including the operation of an active and profitable towboat and barge
industry. Its primary service area, on the other hand,
is situated in the heart of the "Delta" section of
Mississippi and is primarily agricultural.
$1, 800, 663
1
19,037,396
3
20, 838, 059
4
The merging bank, chartered in December 1963, has
resources of almost $2 million. It has no branches
and does not offer any trust services. Lacking in experienced and competent professional management,
the bank has not yet attained a profitable level of
operation. Its principal direct competition is provided
by the $8.8 million Bank of Leland, which is a Statechartered bank having the only other bank office located in Leland.
The charter bank has resources of $20 million and
is the largest bank in Washington County. Its head
office and two branch offices are located in Greenville, which is also the site of the Greenville Bank &
Trust Co. and the First National Bank, Greenville.
These two banks have four offices altogether. Other
competition in the area is afforded by 2 savings and
loan associations, 3 sales finance companies, 11 small
loan companies, and several Federal credit agencies.
The merger will provide the Leland office with more
competent and efficient management. It will enable
the resulting bank to meet better the credit needs of
the growing communities which it serves by increasing
the lending limit to an estimated $151,000 from
$140,000 present limit of the charter bank and the
$20,000 limit of the merging bank. Additional banking services will be offered the Leland area by introducing the trust facilities of the charter bank.
91
Consummation of the proposed merger will have
little effect on competition in the areas served by the
merging banks. The position of the charter bank as
largest bank in the area will not be increased in any
significant degree. Elimination of the insignificant
amount of competition between the merging banks will
have little adverse effect on the overall competitive
structure of the area. Competition in the Leland area
should be enhanced by the merger. The larger lending limit and the more complete banking services of
the resulting bank will provide stronger competition
for the strongly entrenched and solidly established
Bank of Leland, which now "competes only with the
smaller and weaker merging bank.
Applying the statutory criteria to the proposed
merger, we conclude it is in the public interest and
the application is, therefore, approved.
JULY 1, 1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
The Commercial National Bank of Greenville,
Greenville, Miss. (Greenville Bank), is the largest bank
in Greenville (a city of 47,000) and in Washington
County with deposits of $17,988,000. Its head office
and two branches are located in Greenville.
First National Bank of Leland, Leland, Miss.
(Leland Bank) is the smallest bank in the county with
deposits of $1,585,000. Leland (a community of
7,000) is 8 miles east of Greenville.
Of the 5 banks located in the Greenville-Leland area,
Greenville Bank has 32 percent of deposits and Leland
Bank 2.5 percent.
The proposed merger would eliminate some existing
and potential competition between the participating
banks, increase the market share of the county's largest
bank to a limited degree, and place the remaining bank
in Leland at a competitive disadvantage. Thus, it
would appear that the proposed merger, if consummated, would have an adverse effect on competition.
THE FIRST NATIONAL BANK OF APPALACHIA, APPALACHIA, VA., AND THE FIRST NATIONAL EXCHANGE BANK OF
VIRGINIA, ROANOKE, VA.
Banking offices
Name of bank and type of transaction
Total assets
In operation
The First National Bank of Appalachia, Appalachia, Va. (9379), with
and the First National Exchange Bank of Virginia, Roanoke, Va. (2737),
which had
merged July 9, 1965, under charter and title of the latter bank (2737). The
merged bank at the date of merger had
COMPTROLLER'S DECISION
On May 12, 1965, the First National Bank of Appalachia, Appalachia, Va., and First National Exchange Bank of Virginia, Roanoke, Va., applied to the
Office of the Comptroller of the Currency for permission to merge under the charter and title of the latter.
The charter bank is headquartered in Roanoke, and
operates 25 offices in 12 communities situated in 10
counties in the southwestern section of Virginia. The
populations of the towns in which the bank operates
range from 2,100 in Lebanon to 97,100 in Roanoke, the
principal city in this section of the State. Economic
support for these communities is derived from diversified industrial and agricultural activities.
The merging bank operates its main office in Appalachia, population 2,500 and a branch at Big Stone
Gap, population 4,700. Both facilities are situated in
92
$14, 073, 320
2
264,517,384
24
278, 590, 705
To be operated
26
Wise County, which is in the far southwestern portion of Virginia. The economy in this area depends
almost entirely upon coal and has been depressed for
several years. There are a large number of unemployed in the area. The supporting countryside
supports limited agricultural activities, principally the
raising of cattle, tobacco, and dairying. Between 1950
and 1960, the population of Appalachia and Big Stone
Gap fell about 16 and 9 percent, respectively.
The charter bank is the fourth largest bank in Virginia and the largest bank headquartered in the southwest section of the State. Approximately half of its
deposits originate in the Roanoke area. Three other
banks and a branch of a statewide institution are also
located in Roanoke. These three banks are the
Colonial American National Bank, deposits $53 million; Mountain Trust Bank, deposits $40 million; and
the recently organized Security National Bank of
Roanoke, deposits $4 million. The Bank of Virginia,
Richmond, deposits $194 million, an affiliate of Virginia Commonwealth Corp., operates a branch in
Roanoke. Other affiliates of Virginia Commonwealth
Corp. operating in the southwest section of the State
include the Bank of Salem (adjacent to Roanoke);
Washington Trust & Savings Bank, Bristol, which is in
direct competition with the charter bank's branches in
Bristol; and the Peoples National Bank of Pulaski,
which is about 22 miles from the charter bank's
branches in Wytheville. Also, the Roanoke Bank is in
direct competition with branches of several other large
banking organizations which are headquartered outside
of southwest Virginia.
The banking structure in the general area served by
the Appalachia Bank is composed of nine local independent banks and two branches of the Virginia National Bank, Norfolk, the State's second largest bank.
The Appalachia Bank has a slightly larger percentage
of the area's banking deposits than the other banks in
the area.
The addition of the merging bank to the charter
bank will have little effect upon competition. There
is virtually no competition existing between the First
National Bank of Appalachia and the First National
Exchange Bank of Virginia. Consummation of the
proposed merger will not significantly alter the charter
bank's competitive capacity in the areas in which it
currently operates nor alter its position in relation to
other large bank organizations in the State. The proposed transaction will increase the charter bank's share
of deposits in the State by less than 3 percent. Accordingly, competition in the area will remain active.
Consummation of the proposed merger will serve the
convenience and needs of western Virginia. The
strengthening of the charter bank will provide a more
balanced economic structure in Virginia because of the
concentration of economic growth of the State in Richmond and the cities on the coast. The merger will
provide increased funds to sustain the growth in the
Roanoke area and to turn the tide of the depressed
area of Appalachia. Consummation of the merger will
provide a larger lending limit, diversified banking and
trust services in the merging bank's service area which
are not presently offered by the merging bank.
Moreover, the Appalachia area has been designated
as a depressed area under the Appalachian Regional
Development Act of 1965. It is anticipated that this
act will ulitmately stimulate the economic growth of
the area, and the wide range of bank services to be offered by the resulting bank will be fully utilized.
Applying the statutory criteria to the proposed
merger, we conclude that it is in the public interest and
the application is, therefore, approved.
JULY 8, 1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
Since October of 1960, First National Exchange
Bank, the largest bank in southwestern Virginia, has
merged 10 banks with 16 banking offices. From these
banks, at the time merged, about half the present deposits and 73 percent of the present banking offices
of First National Exchange were acquired.
The explosive growth of First National Exchange
Bank via the merger process and the resultant elimination of 10 independent banks in the space of about 4
years is a source of concern from a competitive standpoint; particularly so since it contributes to the rapidly
increasing concentration of banking in Virginia by
large banking institutions. The approval of the instant
merger would further encourage this trend and thereby
result in an adverse effect on competition.
SECURITY TRUST CO., ST. LOUIS, MO., AND MERCANTILE TRUST CO. NATIONAL ASSOCIATION, ST. LOUIS, MO.
Name of bank and type of transaction
Total assets
Banking offices
In operation To be operated
Security Trust Co., St. Louis, Mo., with
and Mercantile Trust Co. National Association, St. Louis, Mo. (15452),
which had
merged July 14, 1965, under charter and title of the latter bank (15452).
The merged bank at the date of merger had
$128,052,634
2
913,306,994
1
1, 040, 357, 271
2
93
COMPTROLLER S DECISION
On April 30, 1965, Security Trust Co., St. Louis,
Mo., and Mercantile Trust Co. National Association,
St. Louis, Mo., applied to the Comptroller of the Currency for permission to merge under the charter and
title of the latter.
I. The Economy of the St. Louis Metropolitan Area
The St. Louis Standard Metropolitan Statistical
Area (SMSA) as defined by the U.S. Bureau of the
Census, includes the city of St. Louis, the Missouri
counties of St. Louis, Franklin, Jefferson, and St.
Charles, and the Illinois counties of Madison and St.
Clair. The area so defined is treated as an economic
unit for statistical purposes by numerous public and
private agencies, including the Federal banking authorities. The integration of the Illinois counties within the St. Louis area has been facilitated by seven
bridges which span the Mississippi River. These will
soon be supplemented by three additional bridges
which are a part of the interstate highway program.
The area's population of over 2.2 million makes it
the 10th largest metropolitan area in the United
States. While the entire area has grown by 500,000
since 1950, the city has actually declined in population
by 100,000. (See table 1.)
TABLE 1.—POPULATION OF THE ST. LOUIS METROPOLITAN AREA
Government Unit
1950
1960
1963
Percentage
change
1950-63
Missouri:
St. Louis City
St. Louis County
Franklin County
Jefferson County
St. Charles County
Illinois:
Madison County
St. Clair County
Total, metropolitan area
St. Louis is making a frontal assault on the problems
of urban blight and decay which face most of our
major cities. City officials estimate that by 1970 about
$2 billion in private and public funds will have been
spent in the process of rejuvenation.
Symbolic of the city's renaissance is the 630 foot
Gateway Arch, designed by the late Eero Saarinen,
which, when completed this year, will be the tallest
manmade monument in the United States. The arch
will dominate the Jefferson National Expansion
Memorial Park, which will occupy 80 acres of what
had been a blighted riverfront area.
About 10 percent of the city's total area has been or
will be razed in the renewal program to make way for
modern commercial, industrial, residential, and public facilities. Construction of a 55,000 seat sports
stadium and supporting facilities near the Archway
park is underway at a cost of $89 million. The $45
million Mansion House project encompasses three 28
story apartment towers and associated commercial and
office facilities. Largest of all the renewal projects
is that for Mill Creek Valley, which will, by 1970, be a
465-acre industrial, commercial, and residential development built at a cost of $200 million. The 22094
856, 796
406, 349
36,046
38, 007
29,834
750, 026
703, 532
44,566
66, 377
52, 970
739,000
813, 000
48,000
76, 000
60, 000
-13.7
100.1
33.2
100.0
101. 1
182, 307
205, 995
224, 689
262, 509
239, 000
284, 000
31.1
37.9
1, 755, 334
2, 104, 669
2, 258, 000
28.6
acre Kosciusko Industrial Park will, when completed,
house industrial plants costing about $100 million. A
variety of smaller renewal projects are also underway.
Thus, massive public and private efforts are being
devoted to the task of creating a physical setting which
will allow the St. Louis area to achieve its full economic
potential. Despite the current properity and abundant
evidence of private and public dynamism, there has
been some concern on the part of St. Louis leaders that
the area, given its natural advantages, is not participating as fully in the national economic advance as might
be expected.
These leaders point to such statistics as the following: While total employment in the United States was
2.7 percent higher in 1964 than in 1963, the increase
for the St. Louis SMSA was 1.5 percent; total manufacturing employment showed about the same differential in the rate of growth, thefiguresbeing 1.9 and 0.8
percent, respectively; while the population of the St.
Louis SMSA has been growing, the rate of growth
has been somewhat less than the average for all U.S,
metropolitan areas. City leaders are hopeful that the
massive renewal program and a coordinated industrial
development program now being mounted will im-
prove the showing of the St. Louis area in these
respects. The emergence of a bank whose capacity
is more in keeping with the size of the St. Louis economy will give additional support to these efforts.
The economy of the St. Louis SMSA enjoys a
number of natural and manmade advantages. Foremost is the location which allowed the city to become
a major transportation center. Situated below the
confluence of the Mississippi and Missouri Rivers,
St. Louis is a key port on a system of 7,000 miles of
navigable waterways, linking 29 large cities in 20
States. Over 8 million tons of barge freight is handled
in the port of St. Louis each year.
With a highly developed water transportation system, it was logical for other forms of transportation
to center here also. St. Louis has become the second
largest rail center in the country, being served by 18
trunkline railroads with aggregate trackage of 132,000
miles, about 60 percent of the national total. A new
terminal building at the Municipal Airport handles
over 120 flights daily of 7 scheduled airlines. Eight
major U.S. highways pass through St. Louis. Major
truck and bus line routes fan out in all directions
from the city. Planning and construction are proceeding for a $750 million network of new expressways,
which will include inner and outer circumferential
beltways.
The St. Louis industrial area is the only one in the
country which produces six basic metals: Iron; lead;
zinc; copper; aluminum; and magnesium. This is
made possible by the unique conjunction of the requisite ores and other raw materials within a limited
area.
Building on this broad resource base, the economy
of the St. Louis SMSA is very well diversified. The
St. Louis Chamber of Commerce has published this
sample listing of products of the area to illustrate the
diversity in manufacturing: Atomic reactor feed materials; jet aircraft; ammunition; automobiles and parts;
bakery products; beer; bricks; candy; caskets; chemicals; cement; containers (metal, paper, plastic, and
glass); drugs and medicines; electrical machinery;
food; footwear; furniture; glass products; hardware;
iron and steel castings; machinery; machine shop
products; meatpacking; paints and varnishes; paper
products; petroleum refining; piston rings; prepared
animal feeds; printing and publishing; rapid transit
and railroad cars; refrigeration equipment; roofiing;
space capsules; steel products; wearing apparel; and
wirework.
As of 1963, 3,183 manufacturing establishments
employed 267,000 people. The St. Louis SMSA ranks
ninth in the country in manufacturing employees and
value added by manufacture. The degree of diversification is illustrated by the fact that no more than 19
percent of the total employees worked within any one
major industry group, as classified by the census. (See
table 2.)
TABLE 2.—MANUFACTURING ESTABLISHMENTS, EMPLOYEES, AND VALUE ADDED BY MAJOR INDUSTRY GROUPS,
ST. LOUIS METROPOLITAN AREA, 1963
Industry groups
Total manufacturing
Food and kindred products
Tobacco products
Textile mill products
Apparel and related products
Lumber and wood products
Furniture and fixtures
Paper and allied products
Printing and publishing
Chemical and allied products
Petroleum and coal products
Rubber and plastic products
Leather and leather products
Stone, clay, and glass products....
Primary metal products
Fabricated metal products
Machinery, except electrical
Electrical machinery
Transportation equipment
Instruments and related products. .
Miscellaneous manufacturing
Value added by
Establishments, All employees, Percent of'total manufacture, Percent of total
1963
value added
Dec. 31, 1963 Dec. 31, 1963 employees
{thousands of
dollars)
3, 183
376
5
24
199
95
110
125
484
251
30
66
74
178
103
345
354
95
61
46
154
266, 950
30, 015
100.0
11.2
2, 536, 508
278, 369
100.0
11.0
12, 787
1,288
4,283
9,471
15,680
19,230
5,924
1,554
9,464
7,862
21,028
17,936
20, 496
15,469
55, 758
6,310
9,969
4.8
.5
1.6
3.5
5.9
7.2
2.2
.6
3.5
2.9
79
6.7
7.7
5.8
20.9
2.4
3.7
62, 104
9,895
29,116
81, 799
123, 140
354, 332
108, 569
14, 870
55, 870
107, 996
171,114
176,722
187, 300
138, 143
488, 351
36, 542
96, 289
2.4
.4
1.1
3.2
4.9
14.0
4.3
.6
2.2
4.3
6.7
7.0
7.4
5.4
19.3
1.4
3.8
95
The largest single employer in the area is the
McDonnell Aircraft Corp., which employs about
35,000 people in its production of F-4 Phantom II
fighter-bombers, Gemini and Mercury space capsules,
and related products. McDonnell ranked third among
all corporations in its receipt of prime military contracts
in fiscal 1964. The showing of McDonnell was largely
responsible for Missouri's third place among the States,
behind only California and New York, in the receipt of
prime military contracts in that same year.
Operation of production facilities by General
Motors, Ford, and Chrysler makes the St. Louis area
the third largest location for automobile production in
the country.
Since St. Louis is in the center of an important
farming region, the handling and processing of agricultural products adds a further dimension to the diversity
of the St. Louis economy. A number of leading meatpacking firms have plants in St. Louis, the second
largest hog market in the world. Stockyard receipts
in 1963 included 2.6 million hogs and almost 700,000
cattle. St. Louis is also a major grain market, with
1963 receipts about 124 million bushels.
In addition to its immediate area, St. Louis serves as
the major trading center for an area with a radius of
150 to 200 miles. This fact, coupled with the necessity of handling the demand for goods by the 2.2 million
people in the metropolitan area, leads to an impressive
volume of wholesale and retail activity. Close to 4,000
wholesale establishments, employing 45,000 people,
had total sales of $5.4 billion in 1963. Over 18,000 retail establishments, employing 105,000 people, enjoyed
sales of $2.6 billion in the same year. Current retail
sales are about 5 percent higher than for the same
period last year. Service activities occupy 53,000 employees in 13,000 establishments with total receipts of
over a half-billion dollars.
Both industrial corporations and the local universities are rapidly expanding their scientific research
activities. In 1964, the St. Louis Research Council was
established to attain maximum coordination of the
area's research projects and facilities, both academic
and industrial.
part of Merchantile Trust which will simultaneously
succeed to all right, title, and interest in the assets of
Security Trust and become responsible for all the
latter's liabilities by operation of law. This agreement
differs from the usual form of merger agreement in that
the consideration passing between the contracting parties is cash rather than the stock of the acquiring bank.
In view of the unusual nature of this proposal, the
first inquiry must be directed to its standing under the
antitrust laws. While it may possess the superficial
earmarks of a simple purchase of assets and assumption of deposit liabilities, it is in reality a merger under
12 U.S.C. 215a. If it were a simple purchase and sale,
the corporate existence of Security Trust must be terminated by a complicated process of liquidation.
Here, however, Security Trust, on merger with Mercantile Trust, ceases to exist immediately, without
liquidation, in accordance with the provisions of the
statute. The question remains as to how this cash
merger must be evaluated in the light of section 7 of
the Clayton Act and section 1 of the Sherman Act.
The Department of Justice in the advisory opinion
submited to the Comptroller of the Currency pursuant
to the Bank Merger Act of 1960 (12 U.S.C. 1828 (c))
considers this proposal to be governed by the decision
in U.S. v. Philadelphia National Bank, 374 U.S. 321
(1963), thereby ignoring the vital differences between
this unusual St. Louis proposal and the normal Philadelphia situation. In the Philadelphia case the Supreme Court held that the plan for the consolidation
of the Philadelphia National Bank and the Girard
Trust Corn Exchange Bank under the charter of the
former, whereby the shareholders of the participating
banks would exchange their shares in accordance with
predetermined ratios for shares in the resulting bank,
was a stock acquistion covered by section 7 of the
Clayton Act. The rationale of the Court was clearly
stated. Starting with the statute, the Court said:
II. Method of Acquisition
The agreement entered into by the participating
banks, the Mercantile Trust National Association and
the Security Trust, while not unknown in banking
circles, is unusual. These banks have entered into an
agreement to merge as provided by 12 U.S.C. 215a.
When this agreement is consummated, the corporate
existence of Security Trust will blend into and become
Since, -as the Court ruled, the FTC has no jurisdiction
over banks, it followed that:
96
By its terms, the present section 7 reaches acquisitions of
corporate stock or share capital by any corporation engaged
in commerce, but it reaches acquistions of corporate assets
only by corporations "subject to the jurisdiction of the Federal Trade Commission.
. . . if the proposed merger be deemed an assets acquisition, it is not within section 7.
Conversely, it must be viewed as a stock acquisition to
fall within section 7. This the Court did by reasoning
that the merger before them, while neither a pure asset
acquisition nor a pure stock acquisition, involved a
little of both and so fell under the prohibition intended
by Congress.
By reason of the unusual features of this proposal, it
does not fall within the ambit of the Court's reasoning
in the Philadelphia case. This is a cash merger as
contemplated by the terms of 12 U.S.C. 215a. Upon
consummation of this merger. Security Bank will cease
its corporate existence; all its assets and liabilities will
pass to Mercantile Trust by operation of law. It
is a pure asset acquisition by merger. Since the consideration for this merger is cash, to be used to satisfy
the interest of Security Trust shareholders, with a concomitant reduction in the capital structure of Mercantile Trust, it cannot be said to be a stock acquisition
within the reach of the Philadelphia decision.
Whether this proposal comes within the purview of
section 1 of the Sherman Act is another question.
That act provides in pertinent part as follows:
Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among
the several States, or with foreign nations, is declared to be
illegal.
The question to be resolved is whether this proposal, a
contract, between two commercial banks is in restraint
of trade or commerce. While the Department of Justice in its advisory opinion on the competitive aspects
of this proposal says it falls within the proscription of
. section 1 as interpreted by the Supreme Court in US.
v. First National Bank and Trust Company of Lexington et al., 376 U.S. 665 (1964), even a cursory reading
of that case reveals that it is distinguishable on its
determinative facts from this proposal.
When the First National Bank & Trust Co. of Lexington and the Security Trust Co. of Lexington consolidated, there were only six commercial banks
serving the city, the only concentration of population
in that section of the State of Kentucky. Mr. Justice
Douglas, writing for the Court, said, ". . . it is clear
that significant competition will be eliminated by the
merger." This conclusion rested on the following
findings: that "Practically all of the business of the
banks in Lexington originates in Fayette County.";
that ". . . commercial banks outside Lexington do a
negligible amount of business in the county."; that the
resulting " . . . bank established by the consolidation
was larger than all the remaining banks combined:";
that with respect to trust business, the participating
banks "Between them . . . held 98.82 percent of all
trust assets, 92.20 percent of all trust department earning, and 79.62 percent of all trust accounts:"; and
that three of the four competing banks testified that the
consolidated bank will, by reason of its image of big226-601—67
S
ness, seriously affect their ability to compete effectively
over the years and will tend to foreclose competition
in the trust field. The facts surrounding this proposal
are significantly different as will be demonstrated
hereinafter.
III. General Character of Management
The Bank Merger Act of 1960 lays down seven
criteria which must be applied to all bank mergers
to determine whether or not they are in the public
interest. Three of these, viz., management, effect on
competition and the convenience and needs of the
community, are particularly significant in this case.
Security Trust is faced with a management problem arising from a lack of men capable of assuming
leadership in the bank. Executive authority rests
almost exclusively in the president of Security Trust
who is also a substantial shareholder. This vigorous
officer is a seasoned and able banker; the problem
here lies in lack of depth of competent and trained
successors. Competing banks and death have taken
his former associates and advisers. Since this application was filed several of his most trusted and dependable aides have died. Despite the competence of
Security Trust's president, he has not been able, with
his decimated staff, to oversee properly all activities
in the bank and to give to each the attention good
banking demands. The results of such a situation cannot help but be reflected ultimately in the bank's
competitive posture.
IV. Effect on Competition
Before proceeding to evaluate the effects of this cash
merger on the banking markets involved, including its
impact on competition, and to compare it with the
situation prevailing in the Lexington case, it is suitable
to comment here on the criteria properly to be considered in determining what is the relevant market.
A. The relevant market
In its advisory opinion, the Department of Justice
attempts to limit the relevant market to downtown
St. Louis. Efforts to assess the competitive impact of
this merger in these terms appear to stem from the
Supreme Court's compromise in the Philadelphia case
in which it equated the relevant market to the fourcounty area where branch banking was permitted by
State law. Reference was made to Fayette County
as the point of reference for assessing the competitive
impact in the Lexington case; Kentucky banks may
branch only in the county where the main office is
located. In the present case in Missouri, a State
97
which prohibits any branch banking, the advisory report would have us look only to the environs of the
main offices, an acre or so in downtown St. Louis.
Such a correlation of a relevant market to the Missouri
antibranching statutes is not meaningful in this case.
We shall demonstrate that neither legal boundaries nor
legal branching limitations can fully define the relevant
banking market.
Recent discussions of bank mergers have put heavy
weight on concentration ratios as a measure of the
effect of the merger on competition. Mechanical application of a concentration ratio approach is apparent
in the advisory opinion of the Department of Justice
on the present case. It is desirable, therefore, to determine the limits of usefulness of concentration ratios
as well as the possible pitfalls in indiscriminate use of
such ratios.
Calculation of concentration ratios involves a determination of the relevant product line to be analyzed
as well as the relevant market area (section of the
country). Both of these determinations are more difficult than they may appear.
Appropriate economic analysis of the effect of a
bank merger on competition requires consideration of
the impact on competition in each of the relevant
products or services provided by commercial banks,
taking account of competition from nonbank institutions and of the substitutability among financial
services.
Commercial banks deal in a wide range of services
and products, and face a substantial amount of competition from nonbank financial institutions. Commercial banks are not products, nor are "total deposits," "total assets," or even "total loans" products.
It is a more reasonable approach to the competitive
problem to examine each of the relevent product lines
and determine whether the merger will result in a
substantial lessening of competition in the market for
that product.
In examining the market for real estate loans, for
example, it would be desirable to consider not only the
amount of business done by the merging banks and the
other commercial banks, but also the mortgage loan
business done by mutual savings banks, savings and
loan associations, and insurance companies. The same
is true in the personal loan field, where commercial
banks face intense competition from personal finance
companies, sales finance companies, and credit unions.
Business loans generally make up the bulk of commercial bank loans, but here also there is considerable
competition with other institutions. Savings and loan
associations and mutual savings banks make real estate
98
loans to business firms. Finance companies and factors make loans on receivables and equipment. Insurance companies are strong competitors in the large
business loan field. Even nonfinancial firms must be
considered, as they extend trade credit to their customers. Trade credit is a particularly important alternative to bank loans for small firms.
The one product line in which commercial banks
face no direct competition from other financial institutions is in the handling of demand deposits. Even here,
however, there are substitutes. Currency, of course, is
one alternative. Many savings banks and savings and
loan associations sell money orders, as do some supermarkets. Traveler's checks is another alternative.
The Supreme Court's justification in the Philadelphia case for disregarding nonbank competition is
that commercial banking products or services enjoy
"such cost advantages as to be insulated within a broad
range from substitutes furnished by other institutions."
As an example, the Court points out that, in competing
with small loan companies in the personal loan market,
commercial banks have a considerable advantage in
that their rates are invariably lower. Nevertheless,
there is competition between commercial banks and
small loan companies. Perhaps more important, there
is competition of both with credit unions and sales
finance companies which charge rates comparable to
those of the commercial banks.
It has been argued that, even where there are nonbank facilities competing in terms of price and cost
with commercial banks, the banks enjoy a preferred
position in the minds of consumers and that this
preference insulates the banks, to some extent, from
competition. This may seem to be the case with savings deposits. Commercial banks do, of course, have
some advantages in competing with other savings institutions. The convenience of "one-stop banking,"
inertia, or lack of knowledge may lead a savings depositor to maintain an account at a commercial bank
while a savings bank across the street is paying a
somewhat higher interest rate. But this does not mean
that there is no competition between the two institutions. The depositor who may not cross the street
for an extra one-fourth percent interest may do so for
an extra one-half percent. The many commercial
banks which have raised their time deposit rates in
recent years have not all done so simply because of competition from other commercial banks.
It follows from this analysis that the relevant market
area differs for each banking product or service. The
relevant market area for personal checking accounts,
for example, is typically small although banking by
mail has been growing in importance in recent years.
The relevant market for large business loans, in contrast, is national. St. Louis banks compete in the latter
market with banks in San Francisco and New York as
well as those in Kansas City and Chicago. The market for small- and medium-size business loans is more
difficult to define precisely. Small firms are generally
confined to a limited geographical area in seeking
funds, both by the cost of traveling and lender's lack
of knowledge of their business. For these loans, the
relevant market would appear to be the metropolitan
area, although allowance must be made for banks and
other institutions on the fringe of the area.
The advisory opinion of the Department of Justice
holds that the relevant geographic market area is
downtown St. Louis. As we have stated, the relevant
market area varies with the product line. The banking product line with the smallest geographic area is
the small-depositor market. Yet it is clear that even
for this product line, downtown St. Louis can hardly
be considered the relevant area. Few people live in
the immediate downtown area. The thousands who
work there live elsewhere in the metropolitan area,
and have the banking alternatives of the downtown
banks and the suburban banks. The individual borrower or depositor has immediate access to banks in
the neighborhood of his residence or of his place of
employment. Commuting patterns link together all
banks in the metropolitan area in one market. Thus,
even for these customers, the relevant geographic market is the metropolitan area. With respect to the
lending activities of banks, it is even more evident that
the metropolitan area will be the smallest relevant
market. Business firms, in seeking loans, are able to
shop among banks in the entire metropolitan area
without being faced with either high travel costs or a
bank's unwillingness to make loans outside of the area
with which it is familiar.
B. Competition and banking regulation
Whatever the limitations of concentration ratios as
a measure of market performance in banking, the entire concept of competition needs careful analysis in
its application to banking. In Brown Shoe Co. v. U.S.,
370 U.S. 294, 344 (1962), it was held that Congress
had indicated a preference for an economy of small
businesses operating in unconcentrated industries. The
Court gave no weight to the advantages to consumers
resulting from the merger because it assumed that
Congress was aware that some inefficiencies would result from its preference for an atomistic industry
structure.
But we cannot fail to recognize Congress' desire to promote
competition through the protection of viable, small, locally
owned businesses. Congress appreciated that occasional
higher costs and prices might result from the maintenance of
fragmented industries and markets. It resolved these competing considerations in favor of decentralization. We must
give effect to that decision.
Although this argument may be correct when applied to other industries, it is clearly not correct when
applied to banking. Congress has clearly stated its
preference for goals other than competition in the laws
enacted which affect the banking structure. Federal
banking legislation has imposed restrictions on bank
entry and bank expansion as a means of preventing
competition that could endanger the viability of the
banking system. Other banking laws and regulations
restrict certain activities of banks on the basis of bank
size; legal lending limits are the most obvious example.
These concepts of the proper relationship of government to banking are fundamentally different from
those applied under the antitrust laws of the unregulated industries.
C. Banking competition in St. Louis
Although we have many reservations about the use
of concentration ratios in analyzing banking markets,
the heavy reliance on this technique in the advisory
opinion of the Department of Justice makes imperative a detailed examination here of the situation in
St. Louis.
Despite the fact that St. Louis is the 10th largest
metropolitan area in the country, the largest bank in
St. Louis, Mercantile Trust Co., is only the 42 d largest
bank in the United States. It has deposits of individuals, partnerships, and corporations of $529.2 million. Mercantile Trust now holds 18.7 percent of the
deposits and 20.9 percent of the loans of all banks in
the St. Louis metropolitan area.
The merging bank, Security Trust, is the seventh
largest of the 132 banks in the St. Louis metropolitan
area and the smallest of the downtown St. Louis banks.
Its $96.1 million of IPC deposits represent about 2.8
percent of these metropolitan area deposits.
After the merger, the resulting bank will ostensibly
hold 21.4 percent of area deposits and 23.6 percent of
area loans. It has been estimated that there will be
an attrition of about 2 percent of deposits since it is
reasonable to expect that not all customers of the
closing bank will transfer their business to the survivor.
Other St. Louis banks will undoubtedly gain deposits
as a result of this merger.
It is useful in evaluating the significance of this
99
increase in concentration ratios to compare the St.
Louis banking structure with that of other large metropolitan areas. As of mid-1962, the percentage of
total commercial bank deposits in the St. Louis metropolitan area held by the largest bank was 18.1 percent.
The figure was higher than this in 76 of the other 80
large metropolitan areas included in a Federal Reserve
study (see table 3). When the percentages of deposits held by the 2 largest banks are considered,
the figure of 34.9 for St. Louis was exceeded in 75
of the other 80 areas. The same two ratios for the
St. Louis metropolitan area had not changed significantly by mid-1964; the percentage of area deposits
held by the largest bank was then 18.7 percent, a very
slight increase, while the percentage held by the two
largest banks had declined slightly, to 34.3 percent.
If we interpose the postmerger estimate of 21.4 percent on the mid-1962 tabulation of concentration ratios
for the other 80 metropolitan areas, we find that it
would be exceeded in 69 of the 80 other areas. Even
when only unit banking metropolitan areas are considered, only 3 of 21 such areas will have concentration
ratios lower than St. Louis after the merger.
While the effect of this merger on aggregate concentration ratios is thus small, it is important to
examine more specifically which borrowers and markets
are affected by this increase in concentration. For
this purpose, it is useful to consider two types of borrowers—large and small firms.
The large firms seek funds in the national financial
market. Large banks all over the country compete
in this market, and a merger of two banks can have
only a negligible adverse effect on competition. In this
merger, moreover, the competitive effect is favorable,
on balance, since Security, because of its limited size,
is not a significant participant in the national market,
and Mercantile's ability to compete after the merger
will be enhanced.
Small firms are largely limited to banks in their
immediate metropolitan area in seeking loan funds.
The small manufacturer or merchant in St. Louis
may seek a loan from a suburban bank or from a downtown St. Louis bank. He cannot ordinarily expect to
borrow from banks in Chicago or New York. Even
here, however, the effect of this merger is less than it
may appear from gross concentration ratios. Mercantile's business is mainly with largefirms;nearly twothirds of its deposits are in accounts of over $100,000.
Correspondent banking business is also important to
Mercantile; deposits of banks represent 18 percent of
Mercantile's deposits. Its business and bank customers
are scattered across the country. It is usually classified
100
as a wholesale bank. Security, on the other hand is
basically a retail bank, dealing with individuals and
smallfirmsin a more limited area. Nearly 40 percent
of its deposits are in accounts of under $10,000.
Competition between the two banks is much more
limited than gross deposit totals imply.
This is not to say that Mercantile and Security do
not compete. They do compete for small business and
individual accounts in the Metropolitan St. Louis
area. But Mercantile by no means has a dominant
position in this market. The FDIC has examined the
distribution of accounts of less than $10,000 in the
St. Louis metropolitan area. Whereas Mercantile
holds 18.7 percent of total deposits in the metropolitan
area, it holds only 7.0 percent of funds in accounts
under $10,000. Adding Security's 2.9 percent of such
accounts brings the combined bank's share of this business to only 9.9 percent. The resulting increase in
concentration in this product line (small business and
individual accounts) is thus clearly negligible.
V. Convenience and Needs of the Community
The comparison in part IV of the concentration
ratios in St. Louis banking with those in other major
metropolitan areas shows conclusively that the St.
Louis SMSA does not have the services of a bank so
large, relative to the size of its economy, as that in
nearly all other metropolitan areas. While the St.
Louis SMSA ranks 10th in the country in population,
its largest bank, Mercantile Trust, ranks 42d. All
but one of the areas larger than St. Louis have at least
one bank larger than Mercantile Trust. Nine areas
with fewer people than the St. Louis area have a larger
bank than does St. Louis.
A number of persuasive factors indicate that the
economy of the St. Louis SMSA would benefit from
the services of a larger bank than is now present. In
part I, it was noted that while the St. Louis area is
prosperous today, there has been considerable concern
about its failure to match the growth in employment,
population and new industry experienced in some comparable areas. Giant strides have been taken to improve the physical and economic setting for industry.
One further step is that entailed in this merger, which
will provide a bank better able to meet the financial
requirements of the larger firms with rapidly growing
operations in the St. Louis area.
It is useful to note that each of the five U.S. cities
which have surpassed St. Louis in population during
the past five decades has at least one bank larger than
any in St. Louis. Further, eight of the nine metro-
TABLE 3.—CONCENTRATION OF COMMERCIAL BANK DEPOSITS IN LARGEST METROPOLITAN AREAS, JUNE 30,
Number
banking
institutions 1
Total
deposits
(in
millions
of
dollars)
Percent
of deposits
Largest
banks1
Total
deposits
(in
millions
of
dollars)
of
banking
institutions 1
2 largest
banks x
States with statewide branch banking
1962
Percent
of deposits
Largest
banks l
2 largest
banks i
States with limited branch banking—
Continued
Fresno, Calif
Providence-Pawtucket,
R.I.-Mass.
Phoenix, Ariz
Sacramento, Calif
Wilmington, Del.-NJ..
Hartford, Conn
Bridgeport, Conn
New Haven, Conn
San Bernardino-Riverside-Ontario, Calif. .
San Jose, Calif
San Diego, Calif
San Francisco-Oakland.
Calif
Honolulu, Hawaii....
Seattle, Wash
Portland, Oreg.-Wash
Tacoma, Wash
Los Angeles-Long
Beach, Calif
Baltimore, Md
Salt Lake City, Utah.
Washington, D.C.Md.-Va
7
438
59.2
76.8
11
8
11
17
14
10
889
955
828
590
764
298
311
51.5
49.6
48.8
47.0
44.7
44.6
43.0
85.3
80.7
70.9
68.5
88.9
84.0
66.3
15
9
10
746
982
1,046
41.7
41.7
41.5
80.4
63.9
66.4
25
11
21
19
10
8,399
700
1,552
1,243
289
41.1
40.6
39.7
39.2
38. 1
65. 1
76.0
59.6
77.0
67.8
52
30
10
11,192
1,586
618
35.4
29.0
28.7
61.0
50.2
55. 1
7
41
2,523
21.8
37.7
Richmond, Va
Syracuse, N.Y
Springfield-ChicopeeHolyoke, Mass
Gary-Hammond-East
Chicago, Ind
Atlanta, Ga
Cincinnati, Ohio-Ky. .
Jersey City, N.J
Louisville, Ky.-Ind. . .
Harrisburg, Pa
Youngstown-Warren,
Ohio
Canton, Ohio
Newark, N.J
Philadelphia, Pa.-N.J. .
New York, N.Y
Wilkes-BarreHazelton, Pa
Allentown-BethlehemEaston, Pa.-N.J
Paterson-CliftonPassaic, N.J
625
32.9
31.7
60.6
55.2
11
354
31.3
59.7
22
39
25
11
19
28
439
1,461
1,372
818
887
420
31.2
31.0
29.3
28.7
28.6
26.8
41.0
56.2
54.7
48.8
57.1
49.8
15
14
42
99
104
474
327
2,490
5,968
40, 724
24.4
20.7
19.8
19.1
19.0
43.6
41.1
36.3
36.0
35.8
31
430
18.6
33.9
37
697
17.8
28.9
41
1,649
16.6
30.6
723
8
11
States with unit banking
States with limited branch banking
Birmingham, Ala
Columbus, Ohio
Toledo, Ohio
Pittsburgh, Pa
Norfolk-Portsmouth,
Va
Grand Rapids, Mich..
Buffalo, N.Y
Worcester, Mass
Akron, Ohio
Mobile, Ala
Rochester, N.Y
Memphis, Tenn
Nashville, Tenn
Dayton, Ohio
Indianapolis, Ind. . . .
Flint, Mich
Knoxville, Tenn
Utica-Rome, N.Y
Boston, Mass
Detroit, Mich
Cleveland, Ohio
New Orleans, La. . . .
Albany-SchenectadyTroy, N.Y
7
13
8
58
638
923
575
3,961
58.7
52.3
51.9
49.9
83.9
74.3
70.2
72.5
10
15
12
11
7
4
7
9
8
26
6
7
12
15
55
44
11
14
376
586
1,517
243
563
288
796
869
734
573
1,224
418
348
323
4,098
5,647
3,724
1,235
49.8
49.4
49.0
48.3
46.4
43.3
43.0
41.8
41.3
40.8
40.3
39.8
39.7
39.5
37.7
37.3
37.2
36.7
68.2
71.2
79.5
67.6
68.8
85.6
68.7
79.9
77.5
57.5
76.5
73.9
65.6
77.8
52.2
54.5
58.9
56.0
19
1,047
33.9
59.6
1
All banks in an area that were controlled by one holding
company were considered as a single bank and their deposits
were added together.
Minneapolis-St. Paul,
Minn
El Paso, Tex
Wichita, Kans
Milwaukee, Wis
Omaha, Nebr.-Iowa...
Fort Worth, Tex
Tulsa, Okla
Jacksonville, Fla
Oklahoma City, Okla. .
Dallas, Tex
Miami, Fla
Orlando, Fla
San Antonio, Tex
Houston, Tex
Beaumont-Port Arthur,
Tex
Denver, Colo
Kansas City, Mo.Kans
Chicago, 111
St. Louis, Mo.-Ill
Fort Lauderdale-Hollywood, Fla
Tampa-St. Petersburg,
Fla
640
835
3,008
1,248
313
765
2,726
43.7
42.0
40.0
38. 1
37.5
36.7
36.4
35.6
35.2
34.4
29.4
28.7
28.1
27.9
77.4
83.6
64.9
56.6
59.1
66.7
68.6
59.9
58. 1
64.2
36.8
43.3
50.2
44.5
17
61
305
1,450
27.3
22.8
47.3
44.3
91
255
118
1,979
14, 375
3,431
22.5
21.2
18. 1
38.0
42.2
34.9
18
411
16.9
31.6
41
942
12.7
25.0
63
8
20
36
30
30
33
18
38
73
38
18
25
64
2,423
311
443
1,823
664
880
747
NOTE.—The "largest metropolitan areas" are the Census
Bureau's standard metropolitan statistical areas with populations of 300,000 or more.
Source: Federal Reserve Bulletin, September 1963.
101
politan areas which have fewer people but at least one
bank larger than any in St. Louis are growing at a
faster rate than is the St. Louis area.
The breadth of services offered is related to bank
size. A very large bank will have a sufficient volume of
loans to specific industries to hire loan officers who are
experts on these industries. The combination of banking and industry expertise held by these men benefits
all their customers, large and small.
The rates of growth of a number of industrial cor-
porations with major operations in the St. Louis area
have outdistanced the rates of growth of the major
St. Louis banks in recent years. (See table 4.) For
example, the rates of growth in total assets between
1950 and 1963 was as follows for these corporations:
Brown Shoe Co., 319 percent; Emerson Electric Co.,
505 percent; Granite City Steel Co., 1,582 percent;
McDonnell Aircraft Corp., 794 percent; Monsanto
Co., 540 percent. In contrast, the comparable figure
for Mercantile Trust was 109 percent.
TABLE 4.—GROWTH OF TOTAL ASSETS OF SELECTED ST. LOUIS MANUFACTURING CORPORATIONS AND MAJOR ST.
LOUIS BANKS, 1950-63
1950
Manufacturing corporations:
Brown Shoe Go
Emerson Electric Manufacturing Co
Granite City Steel Co
Laclede Steel Co
McDonnell Aircraft Corp
Monsanto Co
Ralston-Purina Co
nks:
Mercantile Trust Co., N.A
First National Bank in St. Louis
Boatmen's National Bank
Bank of St. Louis
Obviously, as local corporations expand to national
operations, they will tend to enter the national loan
market. Thus, it is not implied that local banks should
be able to service all or even most of their credit needs.
However, the ability of local banks to retain a reasonable proportion of these corporations' business will
be beneficial for the borrowers and the local economy,
as well as the banks. For example, the Monsanto Co.,
a St. Louis-based corporation, has just completed arrangements for a $100 million loan. The company
found it necessary to secure $88 million of this outside
St. Louis; only three St. Louis banks were able to
participate in the remaining $12 million. Because of
the limited capacity of St. Louis banks, growing
St. Louis corporations are having to place ever-greater
reliance on Eastern and Chicago banks.
Although the legal lending limit of Mercantile will
decline slightly because of the terms of the merger,
the larger lending limit of Mercantile will apply to
all the assets of Security. The acquisition of the
deposits of Security Trust will bring the relationship
between the lending limit and the deposits of Mercantile to a figure more nearly in accord with accepted
banking practice. Mercantile is currently somewhat
overcapitalized, ranking 42d nationally in assets but
33d in capital. As a result of the acquisition, the
102
1963
Percentage
increase
$36,496, 324
20, 526, 096
12, 808, 187
19, 117,241
22,430, 723
221,377,051
87, 808, 998
$153,064,874
124, 226, 372
215,384,376
51,447,320
200,611,452
1,416,072,000
333, 799,467
319.4
505.2
1,581.6
169. 1
794.4
539.7
280.1
413, 143, 670
522, 233, 687
164,394,000
96, 914, 000
861, 756, 865
742, 574, 933
255, 503, 000
150,372,000
108.6
42.2
55.4
55.2
actual lending capacity of Mercantile will be increased.
The larger resources of the resulting bank will allow
greater loan diversification to be achieved so that the
bank will be willing to approach its legal lending limit
for individual loans more often than is now the case.
Large creditors will not be the only beneficiaries of
the greater lending capacity of the resulting bank.
The massive St. Louis urban renewal program has
required a tremendous volume of credit. Mercantile
and the other St. Louis banks have helped to meet
these credit needs to the extent they were able to do
so. For example, Mercantile's participation in the
Downtown Sports Stadium project was crucial. The
Mansion House project was more than $1 million
short of the funds required to secure a Federal Housing
Authority commitment until Mercantile came to the
rescue. Mercantile has also participated in the financing of the Gateway Arch, the Mill Creek Valley project, the Kosciusko Industrial Park, and the Bi-State
Transportation Authority operations, among others.
It is from St. Louis that financial aid must come
to improve the economies of southern Illinois and the
rural areas of Missouri. Increasing the capacity of
St. Louis' largest bank is likely to facilitate this flow
of funds.
We cannot ignore, in considering this merger, the
prohibition on branching faced by the banks in Missouri. This natural avenue of bank growth is not
available to St. Louis banks. This is a major reason
for the failure of the large downtown banks to keep
pace with the growth of the economy of the St. Louis
area. The population of the city of St. Louis has
declined from 857,000 in 1950 to 739,000 in 1963,
while the population of the area has increased by over
500,000. (See table 1.) As could be expected, the
deposits of city banks have grown much more slowly
than have those of suburban banks. In the
past decade, for example, while deposits of city-based
banks have increased by 27 percent, deposits of
banks in major suburban areas have increased by as
much as 165 percent. If the city banks could have
followed the population movement by branching, they
would have been able to keep abreast of the overall
economic and industrial growth and this merger might
not have been required.
TABLE 5.—DEPOSITS OF METROPOLITAN ST. LOUIS AREA BANKS, JUNE 30,
Amount
{thousands of
dollars)
Banks
Mercantile Trust Co., N.A. (includes Mercantile-Commerce National Bank)
Add Security Trust Co
Total, resulting bank
First National Bank in St. Louis
Boatmen's National Bank
Bank of St. Louis
National Stock Yards National Bank (111.)
St. Louis County National Bank (Clayton)
Tower Grove Bank & Trust Co
Manufacturers Bank & Trust Co
Manchester Bank
State Bank & Trust Co. (Wellston)
Jefferson Bank & Trust Co
Southwest Bank
Lindell Trust Co
First National Bank & Trust Co. (Alton, IU.)
117 additional banks
Total
Public policies toward bank mergers, charters, and
branches can best be evaluated as a unified whole,
since all these policies shape the banking structure.
With branching prohibited, the chartering of a new
bank is the only way to provide new banking facilities, and merger may, on occasion, be required to allow
the banking needs of certain customers to be met.
The ideal of a balanced banking structure, capable of
meeting the legitimate banking needs of all customers,
large and small, may be achieved in nonbranch States
through judicious application of chartering and merger
policy.
In St. Louis, 132 commercial banks, 29 more than
were operating 10 years ago, now serve the metropolitan area. An examination of the deposit distribution of the St. Louis banks, as it will be after this
merger is consummated, indicates a desirable balance
in the banking structure. (See table 5.) To the
extent that varying sizes of banks are required to
meet the differing needs of customers, large banks,
as well as medium and small, are imperative to serve
1964
Percentage oj
total SMSA
deposits
$750, 933
111,363
18.66
2.77
862,296
628, 599
233,275
140, 892
113,206
104,428
99, 565
67, 265
63,005
55, 979
50,887
47, 165
44, 645
38, 954
1, 473, 795
21.43
15.62
5.80
3.50
2.81
2.60
2.47
1.67
1.57
1.39
1.26
1.17
1.11
.97
36.63
4, 023, 956
100. 00
adequately an urban area. The effect of this merger
is to increase this range; a bank larger than heretofore
available will emerge in St. Louis, while a number of
banks, which have operations comparable with those
of the disappearing bank will remain.
VI. Conclusion
Having considered the subject application in the
light of the statutory criteria, we find the proposed
merger to be in the public interest and it is, therefore,
approved effective on or after June 30, 1965.
JUNE 24,
1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
The proposed merger would increase the deposits of
Mercantile Trust, already the largest commercial bank
in Missouri and 42d largest in the Nation, by over 13
percent. In addition it would eliminate a highly competitive bank in Security Trust, whose office is located
across the street from Mercantile Trust's office in
downtown St. Louis.
103
The resulting bank, with deposits of $996.4 million,
would hold 34.9 percent of the deposits held by 24
banks in the city of St. Louis and 21.5 percent of the
deposits held by the 130 banks in the greater St. Louis
area. Its deposits would exceed those of its closest
*
competitor by over $290 million and would be over
three times as large as the third largest competitor.
It is our opinion that the anticompetitive effects of
the proposed marger are substantial and seriously
adverse.
* *
AVALON BANK, AVALON, PA., AND WESTERN PENNSYLVANIA NATIONAL BANK, PITTSBURGH, PA.
Name of bank and type of transaction
Total assets
In operation
Avalon Bank, Avalon, Pa., with
was purchased July 16, 1965, by Western Pennsylvania National Bank,
Pittsburgh, Pa. (2222), which had.
After the purchase was effected, the receiving bank had
COMPTROLLER S DECISION
On May 25, 1965, Western Pennsylvania National
Bank, Pittsburgh, Pa., applied to the Office of the
Comptroller of the Currency for permission to acquire
the assets and assume the liabilities of Avalon Bank,
Avalon, Pa.
Pittsburgh, the Nation's 16th largest city with a population of 604,332, is a diversified industrial city. Besides being a major factor in the steel industry, the area
contains other heavy industries and service establishments. Research is a major activity in Pittsburgh,
with approximately 150 industrial research and testing
laboratories employing around 18,000 people.
Avalon, with a population of 6,859, is a primarily
residential area approximately 7 miles from downtown
Pittsburgh. It has a small commercial center.
The $8.5 million selling bank, operating only one
office, is the only bank in Avalon. Recently, the bank
has encountered some serious reverses arising from loan
losses. There is no overlap in service areas between
it and the acquiring bank. The nearest Western
Pennsylvania National Bank office is in McKees Rocks,
which is 4.5 miles away and is separated by the Ohio
River.
Competition in Pittsburgh is provided by the Mellon
National Bank & Trust Co., the Pittsburgh National
Bank, and 20 other smaller banks. In addition, there
are almost 200 savings and loan associations in the
area.
The transaction will scarcely affect the competitive
position of the acquiring bank in Pittsburgh. It will,
however, greatly expand the lending limits now provided by the selling bank in its service area. Also,
Western Pennsylvania National Bank will offer a com104
To be operated
$9, 531, 992
590, 820, 008
600, 052, 097
57
plete range of trust services, not now available in Avalon. The convenience and needs of this area will thus
be better met.
While we would be reluctant to encourage the entry
into the National banking system of a bank beset by
the vicissitudes of the selling bank, this transaction appears to be the only way in which the bank can weather
the storm of recent months. The strength of the acquiring bank leads us to expect that the Avalon community will once more be served by a viable institution.
The public interest compels us to approve this rescue
of the State bank in Avalon by the Western Pennsylvania National Bank.
Applying the statutory criteria to the proposal, we
conclude that, it is in the public interest and the application is, therefore, approved.
JULY 16, 1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
Western Pennsylvania National Bank is the third
largest bank in the Pittsburgh area (Allegheny County)
holding approximately 12 percent of the deposits and
loans held by banks in that area. Banking in this area
is almost totally dominated by the three largest banks
operating there which control over 83 percent of the
area's total deposits.
Western has acquired 24 banks since 1953 and in
the last 18 months has acquired 5 banks and now has,
including this application, 2 merger applications
pending.
Avalon Bank is a small bank located in the town
of Avalon near the Ohio River, just outside the corporate limits of the city of Pittsburgh. Although
Avalon Bank and the nearest branch of Western
Pennsylvania National Bank are located some miles
apart, it appears that because of the limited number
of banking alternatives available in this area, there is
some direct competition between the two banks. Further, banking in Allegheny County is extremely concentrated and Avalon Bank is located in the center of
this concentration. The merger, if consummated, will
increase the already great concentration and further
a long continued trend toward concentration in the
area.
The instant merger, standing alone, however, would
not appear to have significant anticompetitive effects
due to the relative small size of the merging bank, its
financial condition and the lack of substantial competition to be eliminated between the merging banks.
BANK OF GILES COUNTY, PEARISBURG, VA., AND THE FIRST NATIONAL EXCHANGE BANK OF VIRGINIA, ROANOKE, VA.
Banking offices
Name of bank and type of transaction
Total assets
In operation To be operated
Bank of Giles County, Pearisburg, Va., with
and the First National Exchange Bank of Virginia, Roanoke, Va. (2737),
which had
merged July 16, 1965, under charter and title of the latter bank (2737). The
merged bank at the date of merger had
COMPTROLLER'S DECISION
On May 19, 1965, the Bank of Giles County, Pearisburg, Va., and the First National Exchange Bank of
Virginia, Roanoke, Va., applied to the Office of the
Comptroller of the Currency for permission to merge
under the charter and title of the latter.
The charter bank operates 25 offices in 12 communities situated in 10 counties in the southwestern
section of Virginia. The populations of the towns in
which the bank operates range from 2,100 in Lebanon
to 97,100 in Roanoke, the principal city in this section
of Virginia. Economic support for these communities is derived from diversified industrial and agricultural activities.
The merging bank's main office is located in a town
of 2,300, and serves an area with a population of
17,800. A division of Celanese Corp. of America accounts for a major portion of manufacturing employment in such area. This plant produces acetate fiber,
flake, and cigarette filter. Other products produced in
the area include shoe leather, limestone products, textiles, lumber, and concrete blocks. There is also
limited agricultural activity, the importance of which
is declining. The Appalachian Regional Development
Act of 1965 designates Giles County as a depressed
area.
The charter bank, the fourth largest in Virginia, is
the largest bank headquartered in the southwest section of the State. Approximately half of its deposits
$6, 669, 714
2
280,917,540
26
287, 251, 230
28
originate in the Roanoke area. Four other banks also
serve Roanoke, including the $194 million Bank of
Virginia, Richmond, Va., an affiliate of Virginia Commonwealth Corp. In other areas the charter bank also
competes with other affiliates of Virginia Commonwealth Corp. and several other large banking organizations which are headquartered outside of southwestern Virginia.
The banking structure in the area served by the
merging bank is composed of four relatively small independent banks. The merging bank and the First
National Bank of Narrows are the two largest in the
area. Nonbank financial institutions in the same area
include savings and loan associations, insurance companies, a credit union, sales finance and personal loan
companies, and direct lending agencies of the Government.
The proposed merger will not eliminate competition
in the area served by the merging bank since there is
virtually no competition between the charter and merging banks. The proposed merger would provide the
area of the merging bank with experienced trust services and a greater loan limit for present and future demands of industry. Consequently, entrance of the
charter bank into this area should stimulate competition and provide increased funds for future growth,
consistent with its regional redevelopment. Also, the
strengthening of the charter bank will provide a more
balanced banking structure in Virginia.
105
Applying the statutory criteria to the proposed
merger, we conclude that it is in the public interest and
the application is, therefore, approved.
JULY 15,1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
Since October of 1960, First National Exchange
Bank has merged 11 banks with 18 banking offices.
From these banks First National Exchange acquired
approximately half its present $255 million deposits
and 75 percent of its present 24 banking offices. The
instant merger, which would add another $6 million
in deposits to the First National Exchange total, repreresents the third in 1965.
The elimination of 11 independent banks in so short
a space of time by the largest bank in southwestern
Virginia contributes to the rapidly increasing concentration of banking in Virginia by large banking institutions. Approval of the instant merger in our view
would further the concentration trend and in this respect may result in an adverse effect on competition.
CENTRAL BANK NATIONAL ASSOCIATION, TACOMA, WASH., AND PEOPLES NATIONAL BANK OF WASHINGTON,
SEATTLE, WASH.
Banking offices
Name of bank and type of transaction
Total assets
In operation
Central Bank National Association, Tacoma, Wash. (15477), with
was purchased July 28, 1965, by Peoples National Bank of Washington,
Seattle, Wash. (14394), which had
After the purchase was effected, the receiving bank had
COMPTROLLER S DECISION
On May 27, 1965, Peoples National Bank of Washington, Seattle, Wash., with $236 million in IPG deposits, applied to the Office of the Comptroller of the
Currency for permission to acquire the assets and assume the liabilities of Central Bank, National Association, Tacoma, Wash., a bank holding $5.8 million in
IPC deposits.
Seattle, with a population of 563,000, is the center
of a large metropolitan area containing some 1 million
persons. It is the largest trading center in the northwest and a key distribution point for the northwestern
United States, Alaska, and the Orient. The city is
predominantly a manufacturing center, and its economy, somewhat dependent upon the Boeing Co., reflects the fluctuations of the aircraft industry. With
its extensive deep-water harbor facilities, Seattle is a
major shipping center and the center for the salmon
and deep-seafishingindustry of the North Pacific coast
and Alaska.
Tacoma, on Puget Sound, is 32 miles south of
Seattle. With a population of 151,000 and a trade
area of 290,000, it is the third largest city in Washington. The city has one of thefinestnatural harbors
in the world and is the home of the Weyerhaeuser
Lumber Co. Tacoma has more than 500 industries,
which include lumber, pulp, papermills, furniture and
106
$6, 814, 181
3
297, 733, 989
304, 231, 676
35
To be operated
38
manufacturing plants, plywood factories, shipyards,
food processing, and foundries, all of which provide
wide diversification and a consistency of employment.
The acquiring bank has 7.6 percent of the deposits
in Washington. The two larger banks in both Seattle
and the State, the Seattle First National Bank and the
National Bank of Commerce of Seattle, have substantial deposits. The acquiring bank has followed a
vigorous policy of expansion of services and facilities
which have improved its position. The selling bank,
the 33d largest in the State, has a minor deposit position in the State and in Tacoma.
The acquisition of Central Bank, National Association, by the larger Peoples National Bank will offer the
customers of the selling bank, the ninth largest in
Tacoma, improved management and additional banking services, such as foreign, trust and investment departments, and automatic data-processing.
Neither the acquiring bank, located in King County,
nor the selling bank, in Pierce County, has an office
within the other bank's county. The competition existing between the two banks is clearly insignificant,
as their main offices are 35.7 miles apart and their
closest offices are separated by a distance of 10.6 miles.
Applying the statutory criteria to this proposal, we
conclude that the proposed acquisition of assets and
assumption of liabilities is in the public interest and it
is, therefore, approved.
JULY 26, 1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
People's National is the third largest bank in the
city of Seattle. Central Bank, although much smaller,
is the sixth largest bank in the city of Tacoma which
is located about 30 miles south of Seattle on Puget
Sound. There is some competition between the par-
ticipating banks in the area adjacent to Tacoma. In
both communities the two largest banks account for
over 70 percent of the total commercial banking resources. The present acquisition will eliminate a degree of existing competition between the participating
banks. However, since neither bank is in a dominant
position in either Seattle or Tacoma and because of
the relative small size of the merging bank, it does not
appear that the effect of this merger on competition
would be significantly adverse.
THE NATIONAL DEPOSIT BANK OF ARNOLD, ARNOLD, PA., AND WESTERN PENNSYLVANIA NATIONAL BANK,
PITTSBURGH, PA.
Banking offices
Name of bank and type of transaction
Total assets
In operation To be operated
The National Deposit Bank of Arnold, Arnold, Pa. (11896), with
and Western Pennsylvania National Bank, Pittsburgh, Pa. (2222), which
had
merged July 29, 1965, under charter and title of the latter bank (2222).
The merged bank at the date of merger had
COMPTROLLER S DECISION
On May 18, 1965, the National Deposit Bank of
Arnold, Arnold, Pa., and Western Pennsylvania National Bank, Pittsburgh, Pa., applied to the Office of
the Comptroller of the Currency for permission to
merge under the charter and with the title of the
latter.
Arnold is located on the Allegheny River in Westmoreland County, 21 miles northeast of downtown
Pittsburgh. With a population of 9,437, Arnold and
4 other towns form an industrial and residential complex based primarily on the manufacture of aluminum
and steel products. The 1960 population of this area
was 31,937.
Pittsburgh, with a population of 604,000, is the 2d
largest city in Pennsylvania and the 16th largest in
the country. It is the seat of Allegheny County,
population 1,600,000, and is one of the world's major
industrial cities. Although primarily known for its
production of iron and steel, nearly 6,000 different
products are manufactured in the Greater Pittsburgh
area.
The merging bank, with $11.3 million in IPC
deposits, operates a head office in Arnold, and a single
branch in nearby New Kensington. It has approximately 0.3 percent of deposits and loans from the
combined Arnold-Pittsburgh area.
$13,431,465
2
598, 293, 031
57
611,724,496
59
The charter bank, with $416 million in IPC deposits,
is the third largest in the Pittsburgh-Arnold area, with
approximately 11.6 percent of deposits and 13.1 percent of loans from the combined area. It operates
55 offices, 42 of which are located in Allegheny County.
The two largest banks in the Pittsburgh area, the
Mellon National Bank and the Pittsburgh National
Bank, far exceed the charter bank in size.
The merging bank does not possess trust powers.
Consummation of the merger will bring to that bank's
trade area the services of a complete trust department.
The merging bank is lacking in depth of management. The problem is particularly acute now as the
chief executive officer has reached the age of retirement. Consummation of the merger will provide the
merging bank with needed knowledgeable management.
The charter bank has no banking office in the
Arnold bank's service area. Consequently, there will
be no apparent elimination of direct competition between the merging banks. Further, consummation
of the merger will mean entry of the third largest
bank in Greater Pittsburgh into competition with the
first, second, and fourth largest banks in the Arnold
area.
Applying the statutory criteria to the proposed
107
merger, we conclude that it is in the public interest
and the application is, therefore, approved.
JULY 26, 1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
Western Pennsylvania National Bank proposes to acquire the National Deposit Bank of Arnold. The latter
had, as of April 26, 1965, total assets of $13.3 million.
It operates in a small corner of northwest Westmoreland County, Pa., about 22 miles from Pittsburgh, Pa.
Western Pennsylvania National Bank, a large Pittsburgh institution with total assets of $609.2 million, op-
erates 40 branch offices in Alleghany County and 13 in
surrounding counties. There is no apparent competition between the two banks.
While the proposed merger would mean the entry
of the third largest bank in greater Pittsburgh into
competition within the Arnold area where the first,
second, and fourth largest now operate, it would also be
another step in the trend toward concentration by
elimination of independents through mergers.
But for the increase in concentration and the elimination of another independent bank by one of
dominance, it is our view that the effect on competition
would not be substantially adverse.
PACIFIC STATE BANK, HAWTHORNE, CALIF., AND UNITED STATES NATIONAL BANK, SAN DIEGO, CALIF.
Banking offices
Name of bank and type of transaction
Total assets
In operation
Pacific State Bank, Hawthorne, Calif., with
and United States National Bank, San Diego, Calif. (10391), which had
merged July 30, 1965, under charter and title of the latter bank (10391). The
merged bank at the date of merger had
COMPTROLLER'S DECISION
On May 13, 1965, United States National Bank,
San Diego, Calif., and Pacific State Bank, Hawthorne,
Calif., applied to the Office of the Comptroller of the
Currency for permission to merge under the charter
and with the title of the former.
San Diego, with a population of approximately 654,000, is a Pacific port city located 12 miles north of the
Mexican border and is California's third largest city.
Although it is headquartered in San Diego, the charter
bank has offices infivemajor counties in southern California. The economy of this area is highly diversified in agriculture, industry, and foreign and domestic
finance. Other commercial and service activities include fishing, tourism, manufacturing, military establishments, and retail trade. The employment rate
is rising and the area is growing in population by nearly
400,000 each year.
The charter bank, with total IPC deposits of $149
million, is the 10th largest bank in the State. It
operates 34 offices in the counties of San Diego, Los
Angeles, Orange, Riverside, and San Bernardino and
has applications approved for 2 additional branches
in San Diego County. The principal competitors in
southern California are four of thefivelargest banks in
the State. The proposed merger will not change
108
$32,891,205
275, 071, 670
307, 962, 875
To be operated
6
36
42
the position of the bank in respect to these large
competitors.
Hawthorne, with a population of 45,000, is located
some 14 miles southwest of downtown Los Angeles.
It has numerous small business concerns and manufacturing plants, with aircraft and electronic components production predominating.
Pacific State Bank operates six offices in the southwestern section of the Los Angeles metropolitan area.
Aggregate population of cities with Pacific State Bank
branches is around 213,000. The economy of this
area is primarily industrial. Oil production and processing, automobile manufacturing, and steel fabrication represent the primary industries. The population
within this southwestern section of the Los Angeles
metropolitan area is continuously expanding.
The merging bank has total IPC deposits of $23.9
million. Competition is offered the Pacific State Bank
by 78 existing or approved offices of 5 large branch
banking institutions, 4 small unit banks, and 5
branches of 4 smaller branch banking institutions.
Also, there are 45 offices of 27 savings and loan associations located in the South Bay area. The same four
of the five largest banks in California, which furnish
competition to the charter bank, dominate the banking
complex of the Los Angeles area. The resulting bank
will have an insignificant percentage of the total deposits in this area.
The merging banks do not compete with each other,
as their service areas join but do not coincide. The
United States National Bank has no offices in the
South Bay area where all of the offices of Pacific State
Bank are located. The nearest office of these two
banks is United States National Bank's branch in
North Long Beach, which is 7 miles southeast of Pacific
State Bank's branch in Torrance. There are natural
barriers and numerous offices of other banks between
these offices of the merging banks. They have no
common depositors, borrowers, or stockholders.
Pacific has never participated with United States National in any loans.
The merger will result in a larger bank with a wider
range of banking services, larger lending limits and
greater possibilities of achieving economies of operation. The branches of the merging bank will be able
to service loans to larger local commercial and industrial concerns, and to provide substantially more competition to the large branch banking institutions now
serving the area. In addition, the merger will solve a
serious management and other problems at the Pacific
State Bank.
Applying the statutory criteria to the proposed
merger, we conclude that it is in the public interest
and it is, therefore, approved.
JULY 30,
1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
This is a proposal by the charter bank, a San Diegobased institution with 33 branches, some in the vicinity
of Los Angeles, and deposits of $225 million, to acquire
by merger a six-office bank serving the South Bay area
near Los Angeles. The charter bank has acquired 6
banks, with a total of 10 offices, since 1950. The banks
acquired account for more than 25 percent of the
charter bank's deposits. This would be its most significant merger to date.
Although the charter bank operates several offices
in the Los Angeles area, it is asserted that the service
areas of the merging banks are contiguous rather
than overlapping. While this is not determinative to
show the banks are not in actual competition, the
merger, in any event, would eliminate competition
which might prevail should either bank extend its
operations into areas now served by the other.
The merging bank, which, during its 10 years of
existence, has grown to a six-office institution with
deposits in excess of $30 million and has rendered
significant service to the South Bay area, would be
eliminated as an independent competitor by the proposed merger. Although branches of California's
largest banks are located in the South Bay, the area is
also served by several small institutions which might be
encouraged to seek unions with large banks if this
proposal is approved.
Thus, the merger would eliminate potential competition and further the trend toward concentration of
California's commercial banking resources in the hands
of a few large regional and statewide banks.
For these reasons, it is our view that the proposed
merger would have an adverse effect on competition.
THE FIRST NATIONAL BANK & TRUST CO. OF SCHUYLKILL HAVEN, SCHUYLKILL HAVEN, PA., AND PENNSYLVANIA
NATIONAL BANK & TRUST CO., POTTSVILLE, PA.
Total assets
Name of bank and type of transaction
In operation To be operated
The First National Bank & Trust Co. of Schuylkill Haven, Schuylkill Haven, Pa.
(5216), with
and Pennsylvania National Bank & Trust Co., Pottsville, Pa. (1663), which
had
merged July 30, 1965, under charter and title of the latter bank (1663). The
merged bank at the date of merger had
COMPTROLLER'S DECISION
On May 24, 1965, Pennsylvania National Bank &
Trust Co., Pottsville, Pa., and the First National Bank
& Trust Co., Schuylkill Haven, Pa., applied to the Of-
$10,806,455
57, 352, 360
68, 158, 378
fice of the Comptroller of the Currency for permission
to merge under the charter and with the title of the
former.
The charter bank, with deposits of individuals, part109
nerships, and corporations totaling $49.5 million, operates 9 offices all of which, except 1, are located
within Schuylkill County. The main office at Pottsville is 4 miles north of the only office of the $8.5 million merging bank, and both institutions are part of the
same economic area.
The Greater Pottsville region has, in the past, depended almost exclusively upon anthracite coal for its
economic life. A decline in the use of this coal plunged
the region into a severe economic depression, and unemployment reached as high as 19.9 percent at the end
of 1958. The populations of Pottsville, approximately
21,000, and Schuylkill Haven, exceeding 6,000, had, in
1960, declined by 8 percent over the previous decade.
The present economic forecast, however, is optimistic.
As a result of efforts by the Greater Pottsville Industrial
Development Corp., a nonprofit organization designed
to promote industry in southern Schuylkill County, the
area has attracted textile and other light manufacturing industries. Unemployment rates are still above 7
percent, but it is likely that the region has entered a
period of economic improvement.
The complete service area for the charter and merging banks stretches from 3 to 25 miles from Pottsville,
and from 7 to 29 miles from Schuylkill Haven. The
American Bank & Trust Co. of Pennsylvania, with its
main office in Reading, is by far the dominant banking institution as it holds 42.7 percent of total deposits
and 50.6 percent of all loans. Its branch in Pottsville
alone holds $11 million in deposits of individuals, partnerships, and corporations. The charter bank, currently the second largest bank, holds 10.5 percent of
total deposits and 9.5 percent of all loans. Consummation of the merger will increase these percentages to
12.3 and 11.1 percent, respectively, but it will scarcely
alter the relative competitive positions of banks within
the service area. The third bank in size, the Miners
National Bank of Pottsville, holds 6.7 percent of area
deposits, and it will continue to offer effective competition to the two larger institutions.
After completion of the merger, the main office of
the merging bank will become a branch of the charter
bank. The residents of Schuylkill Haven will thus be
able to take advantage of additional services such as
a time sales department, FHA- and VA-financed housing, and a well-staffed, effective trust department.
Furthermore, the greater lending limits will enable the
bank to increase its assistance to industrial development opportunities not only at Schuylkill Haven but
also at other branch sites.
Consummation of the merger will avert a serious
management problem for the merging bank. Within
a short time, the principal officer will be at retirement
age, and there are no apparent successors. The remaining members of middle management have neither
the inclination nor the experience to assume major
responsibilities. In the future, officers of the charter
bank will be able to fill any gap which might arise.
Applying the statutory criteria to the proposed
merger, we conclude that it is in the public interest
and the application is, therefore, approved.
JULY 28, 1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
This is Pennsylvania's eighth acquisition since 1953During that time it has grown from a market share of
12.2 percent to, presently, 28.7 percent in central
Schuylkill County. This acquisition of a successful,
vigorous bank would increase its market share to 34
percent, almost entirely traceable directly to mergers
rather than healthy internal growth. The unmistakable trend toward oligopoly now endemic throughout
the State of Pennsylvania is clearly the pattern in
central Schuylkill County.
The effect of the proposed merger on competition
would be adverse.
FIRST NATIONAL BANK OF LONG BEACH, LONG BEACH, CALIF., AND THE BANK OF CALIFORNIA, NATIONAL ASSOCIATION, SAN FRANCISCO, CALIF.
Name of bank and type of transaction
Total assets
Banking offices
In operation To be operated
First National Bank of Long Beach, Long Beach, Calif. (14632), with
and the Bank of California, National Association, San Francisco, Calif.
(9655), which had
merged July 31, 1965, under charter and title of the latter bank (9655).
The merged bank at date of merger had
110
$15,206,828
3
1, 285, 689, 926
57
1, 300,443, 842
60
COMPTROLLER S DECISION
On May 17, 1965, the Bank of California, National
Association, San Francisco, Calif., and First National
Bank of Long Beach, Long Beach, Calif., applied to the
Office of the Comptroller of the Currency for permission to merge under the charter and with the title of
the former.
San Francisco has a population of 745,000 and is
generally considered to be the financial and insurance
capital of the West. It is also a major industrial,
trading, transporation, and communications center.
Other commercial and service activities in the area
include lumbering,fishing,tourism, and mining.
The Bank of California, National Association, with
IPC deposits of $922.6 million, is the seventh largest
bank in California. It holds approximately 2.4 percent of the total bank deposits in California, 4.1 percent in Oregon, and 4.1 percent in Washington. Its
49 branches, excluding 6 temporary locations in San
Francisco pending completion of a new head office
building, serve 36 northern, central, and southern California communities, the cities of Seattle and Tacoma
in the State of Washington, and Portland, Oreg. The
bank presently has approval for three branches which
have not been opened, and an application for another
branch was recently filed.
Long Beach, with a population of approximately
365,000, is located 30 miles southeast of Los Angeles on
the Pacific Ocean. It is the fifth largest city in California and derives its principal economic support from
crude oil producing and refining, a naval shipyard and
naval base, the missile and aircraft industry, and its
port, which is the second largest in cargo handling on
the west coast.
The First National Bank of Long Beach presently
operates two branches and has received approval to
open a branch in the northern part of Long Beach. As
of March 31, 1965, the bank had IPC deposits of $12.4
million.
The Bank of California has experienced some management difficulties in the past, with loan supervision
centered in one office. This situation, however, is
being rectified. Management of the First National
Bank of Long Beach is considered very able and they
will add to the management of the charter bank.
The Bank of California offers a wide range of services, many of which are not offered by the First National Bank of Long Beach. New services which will
be provided by the resulting bank include fiduciary
activities, international banking, insurance premium
financing, and stock transfer services. These services
are now offered by the other large branch banking
systems serving the area.
The lending limit of the First National Bank of
Long Beach is $90,800 compared to a limit of $8.1
million for the Bank of California. The larger lending
limit of the resulting bank will benefit the growing
Long Beach community.
The Bank of California competes throughout California with the other large and vigorous statewide and
regional branch banking institutions, as well as with
many smaller banks located in the 36 California cities
where the Bank of California branches are located.
The nearest branch of the Bank of California to Long
Beach is its regional office in the heart of Los Angeles.
Competition to the First National Bank of Long
Beach is offered by 39 existing or approved offices of
7 large branch banking institutions, 5 offices of smaller
branch systems, and a unit bank.
Competition will not be reduced by the merger. The
result will be the substitution of a larger bank with
some additional services and a substantially larger
lending limit. The competitive impact in Long Beach
and San Francisco from the merger will be nominal.
Applying the statutory criteria to the proposed
merger, we conclude that it is in the public interest
and it is, therefore, approved.
JULY 26,1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
First National is a successful local bank with assets
of $15,241,000, deposits of $13,931,000 and loans and
discounts of $8,553,000. It has two banking offices and
approval to establish a third office all located south of
Los Angeles in the Greater Long Beach area of California. Substantially all other bank offices in this area
are branches of large regional or statewide chain banking systems.
Bank of California is the 7th largest commercial
bank in California and 32d in the Nation with assets of
$1,308,111,000, deposits of $1,168,580,000, loans and
discounts of $722,502,000 and substantial trust accounts. It has 46 banking offices in California and 1
each in Portland, Oreg., and Seattle and Tacoma,
Wash.
Absent the merger, Bank of California could be expected to expand from its headquarters office in Los
Angeles by establishing de novo branches in the growing Long Beach area. The merger would have the undesirable effect of eliminating one of the two smaller
independent banks in the area and would tend to
make Long Beach dependent on branches of banks
111
whose headquarters and major interest are elsewhere
(San Francisco or Los Angeles). In addition, the
merger would tend to increase concentration of bank-
ing into the eight larger banking systems of California.
We conclude that the proposed merger would have
an adverse effect upon competition.
THE UNION CITY NATIONAL BANK, UNION CITY, MICH., AND THE SOUTHERN MICHIGAN NATIONAL BANK OF
COLDWATER, COLDWATER, MLCH.
Name of bank and type of transaction
Total assets
Banking qfiices
In operation
The Union City National Bank, Union City, Mich. (1826), with
was purchased Aug. 31, 1965, by the Southern Michigan National Bank of
Coldwater, Coldwater, Mich. (1924), which had
After the purchase was effected, the receiving bank had
COMPTROLLER'S DECISION
On June 7, 1965, the Southern Michigan National
Bank of Coldwater, Coldwater, Mich., applied to the
Office of the Comptroller of the Currency for permission to acquire the assets and assume the liabilities of
the Union City National Bank, Union City, Mich.
The participating banks are located in Branch
County, southern Michigan, a region which is predominantly agricultural. The area has enjoyed economic and population growth.
Coldwater, with a population of approximately
9,000, is the county seat of Branch County, located
near the Michigan-Indiana line, and serves an estimated trade area with a population of some 32,300.
The city is 35 miles southeast of Battle Creek. Although there are a number of manufacturing plants
located in Coldwater, the economy of the area is
primarily agricultural. The largest employer in the
area is the Coldwater State Home and Training
School, employing some 900 persons and having about
3,000 patients.
Union City, with a population of about 1,750, is
located 13 miles northwest of Coldwater. It is predominantly a farming community, but contains some
light industry.
The Southern Michigan National Bank of Coldwater, with IPC deposits of $14.8 million, is the
third largest of 12 banks competing in the area. It
operates a drive-in branch a short distance from its
main office. Over the past several years, the bank
has experienced growth in deposits and lending activities. Principal direct competition is provided by
Branch County Bank in Coldwater. The First Na-
112
$4,268,316
1
17,565,036
21,828,464
2
To be operated
3
tional Bank of Quincy, 6 miles east of Coldwater, is
also a strong competitor and has obtained permission
to establish a branch at the edge of Coldwater.
The Union City National Bank, with no branches
and $3.8 million in IPC deposits, is the only bank
in Union City. While the bank is in satisfactory
condition, it is operated by unaggressive management.
The bank's growth has been slow over recent years and
it will soon be faced with a management succession
problem. Principal competition is provided by Michigan National Bank with branches at Battle Creek and
Marshall. This bank is active throughout the area
and is an aggressive competitor throughout the State.
In addition, there are two savings and loan associations
in Branch County.
The consummation of the proposed transaction will
bring into Union City expanded banking services,
including an increased lending limit, trust services, and
improved consumer and mortgage lending facilities.
It will solve the management succession problem for
the selling bank and provide an adequate capital
structure and favorable future earnings prospects.
The service areas of the two banks do not overlap
to any significant extent. In view of the size of the
merging bank, the lack of substantial competition between the two banks, and the availability of alternate
sources for banking services in the area, it does not
appear that the proposed transaction will have anticompetitive effects.
Applying the statutory criteria to the proposal, we
conclude that it is in the public interest and the application is, therefore, approved.
AUGUST 24,
1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
The Southern Michigan National Bank of Goldwater, Coldwater, Mich., with assets of $16,364,000
proposes to acquire the assets and assume the liabilities
of the Union City National Bank, Union City, Mich.,
with assets of $4,146,000.
The acquisition by Southern, the largest bank in the
area, of the assets of Union, the second smallest, would
eliminate some competition which exists between them.
However, in view of the size of the merging bank, the
lack of substantial competition to be eliminated and
the availability of alternate sources for banking services in the general area, it does not appear that the
proposed merger would have significant anticompetitive effects.
THE LOUDOUN NATIONAL BANK OF LEESBURG, LEESBURG, VA., AND FIRST & MERCHANTS NATIONAL BANK,
RICHMOND, VA.
Banking offices
Name of bank and type of transaction
Total assets
In operation To be operated
The Loudoun National Bank of Leesburg, Leesburg, Va. (1738), with
and First & Merchants National Bank, Richmond, Va. (1111), which had. . .
merged Aug. 31, 1965, under charter and title of the latter bank (1111). The
merged bank at date of merger had
COMPTROLLER'S DECISION
On June 25, 1965, the Loudoun National Bank of
Leesburg, Leesburg, Va., and First & Merchants National Bank, Richmond, Va., applied to the Office of
the Comptroller of the Currency for permission to
merge under the charter and with the title of the latter.
Leesburg is located 38 miles northwest of Washington, D.C. Once primarily agricultural, the Leesburg
area is now in transition brought about by the building of Dulles International Airport, and the establishment of the Control Center for the Federal Aeronautics Agency. The appearance of light industry and
residential developments signify not only a rapidly
growing area, but also the extension of Metropolitan
Washington.
The merging bank has its main office in Leesburg and
its sole branch at Dulles International Airport, 16
miles southwest of Leesburg. With deposits of individuals, partnerships, and corporations in excess of $8
million, the bank undertakes to serve more than 25,000
people in eastern Loudoun County.
The charter bank, with its main office in Richmond,
a thriving metropolitan center, is the largest single commercial bank in the State. With deposits of $375
million, the bank operates 36 branches. The bank's
service area includes Bedford on the west, Staunton on
the north, Newport News on the east, and Petersburg
on the south. Twenty-one of the offices are within 25
miles of Richmond, however, and the nearest branch
office to Leesburg is 125 miles.
$10,911,046
499, 558, 755
3
37
510,033, 118
40
Currently, the merging bank is the smaller of two
banks with head offices in Leesburg. The Peoples
National Bank, a subsidiary of the Financial General
Corp., operates three offices within the community.
In addition, the First National Bank of Purcellville,
Va., a small bank with principal offices 9 miles to the
west, also operates a branch in Leesburg. The Purcellville bank is a subsidiary of the First Virginia Corp.
Within the service area of Loudoun County, from
which the merging bank draws 90 percent of its customers, there are also three other banking institutions.
Because of the distance between the charter and
merging banks, there is virtually no competition between the institutions and hence, no competition is
eliminated by consummation of the merger. Moreover, the increase in size of the charter bank will not
be significant. Establishment of a branch of the charter bank will result in the introduction of an aggressive
bank capable of competing with the subsidiaries of
the holding companies, and of bringing additional
quality bank services to the community.
Applying the statutory criteria to the proposed
merger, we conclude that it is in the public interest,
and the application is, therefore, approved.
AUGUST 25, 1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
First & Merchants National Bank is the largest bank
in Virginia. Since 1959, 7 banks with deposits of
$131,684,000 have been merged. Direct competition
113
between the participating banks is insignificant, their
closest offices being separated by a distance of 135
miles.
In the service area of Loudoun National Bank,
chiefly Loudoun County, are nine competing banks,
three of which are subsidiaries of two large bank holding companies, viz., First Virginia Corp. and Financial
General. Should the proposed merger be approved
these two holding companies and the largest bank in
Virginia will control 70 percent of Loudoun County's
banking offices and 68 percent of the total deposits held
by such offices. Thereafter, banking in Loudoun
County will be dominated by three of the largest banking aggregations in Virginia. The remaining small
banks in the area will operate at an increased competitive disadvantage and an incentive and precedent for
each to merge in self protection will be established.
To this extent the effect of the proposed merger on
competition would be adverse.
ST. PAUL NATIONAL BANK, ST. PAUL, VA., AND THE FIRST NATIONAL EXCHANGE BANK OF VIRGINIA, ROANOKE, VA.
Banking offices
Total assets
Name of bank and type of transaction
In operation To be operated
St. Paul National Bank, St. Paul, Va. (8547), with
and the First National Exchange Bank of Virginia, Roanoke, Va. (2737),
which had
merged Sept. 14, 1965, under charter and title of the latter bank (2737). The
merged bank at date of merger had
COMPTROLLER'S DECISION
On July 14, 1965, the St. Paul National Bank, St.
Paul, Va., and the First National Exchange Bank of
Virginia, Roanoke, Va., applied to the Office of the
Comptroller of the Currency for permission to merge
under the charter and with the title of the latter.
St. Paul, population of 1,250, is 171 miles west of
Roanoke being located in the extreme western part of
Virginia at the southeastern tip of Wise County. It
serves a trade area of about 19,000 people, the primary
economic activity of which is bituminous coal mining,
apparel manufacturing, and industrial activity utilizing
the area's timber and limestone resources.
Roanoke, located west of the south-central part of
Virginia, has a population of 107,419. It is the center
of the charter bank's service area, the population of
which is 2,918,833. The economy of this service area
is diverse, including industrial, agricultural, and coal
mining activity.
The charter bank operates 29 banking offices in 15
cities or towns in western Virginia, including 8 offices
in Roanoke. It has experienced considerable growth
in deposits and other resources in recent years largely
as a result of increased economic activity in the areas
served by the bank and its branches. A number of
banks compete with the charter bank, with its principal
competition in the Roanoke area coming from the
Colonial-American National Bank and the Mountain
Trust Bank.
114
$6, 989, 414
1
289,403, 748
28
295, 773, 132
29
The merging bank has no branch offices and its head
office in St. Paul is the only banking office within
a 14-mile radius. The nearest bank is the Farmers Exchange Bank which is situated 14 miles north of St.
Paul in Coeburn, Va. Within the area of 25 to 30
miles of St. Paul the merging bank is second largest of
five banks having six offices. The largest is the Wise
County National Bank, headquartered 24 miles west in
Norton, Va. None of these banks competes in a substantial way with the merging bank.
Because the closest offices of the merging banks are
more than 25 miles apart, there is no competition between them which will be affected by the merger.
Competition between the charter bank and its principal
competitors will not be affected since the impact of
the merger will be felt only in the St. Paul area. Since
the merging bank has little competition in and around
St. Paul the proposed transaction will have no anticompetitive effect.
Consummation of the proposed transaction will
bring to St. Paul expanded banking services, including
an increased lending limit, trust services, and numerous kinds of real estate financing. In addition a fulltime agricultural specialist and expert credit and investment advisers will be available to the St. Paul area.
Applying the statutory criteria to the proposal, we
conclude that it is in the public interest and the application is, therefore, approved.
SEPTEMBER 13, 1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
Since October of I960, First National Exchange
Bank has merged 13 banks with 20 banking offices.
From these banks First National Exchange Bank acquired approximately 43 percent of its present nearly
$260 million deposits and 20 of its present 27 banking
offices. The merger now proposed and a pending proposed merger of St. Paul National Bank, St. Paul, Va.,
will together add $8,627,010 in deposits to the First
National Exchnge total and represent the fourth and
fifth banks it has merged in 1965.
This proposal will put added pressure on four small
banks and continue a trend toward concentration of
banking in Virginia which is proceeding at an accelerated pace. To this extent the effect upon competition will be adverse.
THE BANK OF GLASGOW, INC., GLASGOW, VA.5 AND THE FIRST NATIONAL EXCHANGE BANK OF VIRGINIA, ROANOKE,
VA.
Banking offices
Total assets
Name of bank and type of transaction
In operation To be operated
The Bank of Glasgow, Inc., Glasgow, Va., with
and the First National Exchange Bank of Virginia, Roanoke, Va. (2737),
which had
merged Sept. 14, 1965, under charter and title of the latter bank (2737).
The merged bank at date of merger had
COMPTROLLER'S DECISION
On July 19, 1965, the First National Exchange Bank
of Virginia, Roanoke, Va., and the Bank of Glasgow,
Inc., Glasgow, Va., applied to the Office of the Comptroller of the Currency for permission to merge under
the charter and with the title of the former.
Roanoke, head office of the charter bank, has an
urban population of 97,000 and a metropolitan area
population of 159,000. Because of its location and
excellent transportation facilities, the city serves as a
trade center of the entire southwestern section of Virginia. The economy of the area rests upon the prosperous manufacturing industries of Roanoke, which
have total payrolls of some $71 million; the tobacco
fields of southern Virginia, and the coal mines of
Appalachia, whose outlook today is brighter than in
many years due to new exploration and techniques
of development. A trend toward more economic
diversification makes this section of the country's future
growth prospects promising.
Glasgow, population 1,091, is located 44 miles northeast of Roanoke. The city is heavily dependent on the
James Lees & Sons division of Burlington Industries,
which has a plant there employing 2,300 and a payroll
in excess of $8 million. The section of the country of
which Glasgow is a part roughly encompasses most of
Rockbridge County and contains a population of
17,777. There are diversified industries in this area,
$2, 162, 867
1
295, 773, 132
29
297, 928,479
30
although about two-thirds of the area is woodland.
This region also contains many historic and scenic attractions, such as Natural Bridge, and consequently,
tourism is an important and growing factor in the
economy. While per capita income has not kept pace
with the State as a whole, the area can expect to benefit in the future from an economy balanced by manufacturing, agriculture, and service industries.
The charter bank, with $206.1 million in IPC deposits, is the fourth largest bank in Virginia and the
largest bank headquartered in the southwestern section of the State. Approximately half of its deposits
originate in the Roanoke area. Three other banks and
a branch of a statewide institution are also located in
Roanoke. These three banks are the Colonial American National Bank, deposits $53 million; Mountain
Trust Bank, deposits $40 million; and the recently
organized Security National Bank of Roanoke, deposits
$4 million. The Bank of Virginia, Richmond, deposits
$194 million, an affiliate of Virginia Commonwealth
Corp., operates a branch in Roanoke. Other affiliates
of Virginia Commonwealth Corp. operating in the
southwestern section of Virginia include the Bank of
Salem (adjacent to Roanoke); Washington Trust &
Savings Bank, Bristol, which is in direct competition
with the charter bank's branches in Bristol; and the
Peoples National Bank of Pulaski, which is about 22
miles from the charter bank's branches in Wytheville.
The charter bank is also in direct competition with
115
branches of several other large banking organizations
which are headquartered outside of southwestern
Virginia.
The merging bank, with $1.6 million in I PC deposits, is the only bank in Glasgow. There are, however, 12 banking offices competing in the merging
bank's area. These include affiliates of the Financial
General Corp., as well as offices of the Virginia National Bank and the First & Merchants National Bank,
both headquartered in Richmond. The charter bank
also has three offices in the area, although the nearest
is 9 miles away in Buena Vista, and the next nearest is
20 miles away in Lexington.
The effect of the merger upon competition will be
minimal. The distance between the office of the
charter bank nearest the merging bank precludes any
aggressive competition. It is estimated that there are
351 loan and deposit accounts held by the First National Exchange Bank in the Glasgow bank's area, and
103 loan and deposit accounts in the Glasgow bank
originating in the First National Exchange Bank's area.
The dollar amounts in both instances are slight percentages of total loans and deposits.
The merging bank has found banking needs in its
area increasingly difficult to meet. The building of a
stronger economy has necessitated capital and services beyond its capacities. Its lending limit of some
$23,900 is too low for the substantial business and industrial loans it is called upon to make. The executive vice president and ranking executive officer of the
bank serves only in an advisory position, as he is, in
fact, in charge of the office of another bank in
Lexington.
The entry of the charter bank in Glasgow will bring
into the town greater resources, more aggressive management, and greater technical assistance which are
necessary for the convenience and needs of Glasgow's
banking public.
Applying the statutory criteria to the proposed
merger, we conclude that it is in the public interest and
the application is, therefore, approved.
SEPTEMBER 13, 1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
Since October of 1960, First National Exchange
Bank, the largest bank in southwest Virginia, has
merged 13 banks with 20 banking offices. From these
banks First National Exchange Bank acquired approximately 43 percent of its present $260 million deposits
and 20 of its present 27 banking offices. This proposed merger and a pending proposed merger of Bank
of Glasgow, Inc., Glasgow, Va., will together add
$8,627,010, in deposits to the First National Exchange
total and will be the fourth and fifth banks it has
merged in 1965.
The proposed merger is a continuation of a trend
toward concentration of banking in Virginia which is
proceeding at an accelerated pace. To this extent
the effect of this proposed merger upon competition
will be adverse.
STANWOOD STATE SAVINGS BANK, STANWOOD, MICH., AND FIRST NATIONAL BANK OF BIG RAPIDS, BIG RAPIDS,
MICH.
Total assets
Name of bank and type of transaction
Banking offices
In operation
Stanwood State Savings Bank, Stanwood, Mich., with
and First National Bank of Big Rapids, Big Rapids, Mich. (14881), which had. .
merged Sept. 30, 1965, under charter and title of the latter bank (14881).
The merged bank at date of merger had
. COMPTROLLER'S DECISION
On July 20,1965, First National Bank of Big Rapids,
Big Rapids, Mich., and the Stanwood State Savings
Bank, Stanwood, Mich., applied to the Comptroller of
the Currency for permission to merge under the
charter and title of the former.
Big Rapids, with a population exceeding 11,000, is
the largest city in Mecosta County, and it is an im116
$1,692,618
10, 807, 725
12,500,343
To be operated
1
2
3
portant trading center for central Michigan. The
city's largest single industry is Ferris State College
which employs over 600 faculty and administrative
personnel to teach 6,500 students. In addition, Big
Rapids' economic environment includes such diverse
activity as shoe manufacturing, farming and food
processing, tools and hardware, and tourism.
The Village of Stanwood, located 8 miles south of
Big Rapids, is a rural community with a population of
250. While its largest single industry is a 30-bed
osteopathic hospital, the area's economic environment
is best characterized as providing commercial service
for the surrounding agricultural industries.
The charter bank, with total deposits equalling $8.9
million, holds 27 percent of bank deposits within a service area including and exceeding Mecosta County.
The merging bank, with deposits of $1.5 million, holds
4 percent of these deposits. The resulting bank, with
31 percent of deposits, will become the largest of eight
banks within the service area. This increase in relative size, however, will not bring about competitive imbalance. Currently, the largest bank, with 28 percent
of area deposits, is the Citizens State Bank of Big
Rapids which because of its relative size and aggressiveness will continue to provide keen competition.
The charter and merging banks, while in close geographic proximity, do not essentially compete with each
other. The charter bank has a primarily industrial
clientele while the merging bank serves a more agricultural community. In fact, more than half of the
loans of the merging bank are for agricultural purposes.
Consummation of the merger, therefore, will not
significantly diminish competition within the service
area.
The management problems at the merging bank
compel consummation of the merger in the public
interest. At the present time, the president and
cashier, the bank's principal executive officer, must
leave Michigan because of his health. The assistant
cashier, 62 years old, has already manifested an intention to retire. Possibilities of attracting topquality, high-level management are remote. Consummation of the merger, however, will allow the capable
staff of the charter bank to maintain a dependable
banking office in Stanwood.
Applying the statutory criteria to the proposed
merger, we conclude that it is in the public interest
and the application is, therefore, approved.
SEPTEMBER 24, 1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
Stanwood State (assets of $1,640,000 as of June 30,
1965), and First National (assets of $10,032,000 as
of June 30, 1965), appear to fall into the category
of small banks, one serving essentially a rural community of 250 (Stanwood, Mich.), and the other a
small industrial center of 11,000 (Big Rapids). There
appears to be relatively little competition between the
two, and with eight other banks within a range of 8
to 31 miles of Stanwood and Big Rapids left to
compete with the resulting bank, there would appear
to remain ample alternative banking facilities to satisfy
the needs of both communities.
No anticompetitive effects, therefore, are discernible
from the proposed merger.
THE FIRST NATIONAL BANK OF BLACKSTONE, BLACKSTONE, VA., AND THE FIDELITY NATIONAL BANK, LYNGHBURG,
VA.
Banking offices
Total assets
Name of bank and type of transaction
In operation To be operated
The First National Bank of Blackstone, Blackstone, Va. (9224) with
and the Fidelity National Bank, Lynchburg, Va. (1522), which had
merged Sept. 30, 1965, under charter and title of the latter bank (1522). The
merged bank at date of merger had
COMPTROLLER S DECISION
On August 4, 1965, an application for approval of
the proposed merger was filed with the Comptroller
of the Currency.
The charter bank is located in Lynchburg, Va., the
center of a trade area consisting of the city and significant portions of 4 counties with a combined city-county
population of about 150,000. The city is becoming increasingly industrialized; the counties are essentially
rural and agricultural.
$4, 979, 506
85,475,616
90, 455, 123
1
16
17
At the present time, the charter bank has total
resources of $84.8 million. Its primary competition in
Lynchburg is furnished by a branch of the First &
Merchants National Bank (the State's largest bank)
and the $48.8 million First National Trust & Savings
Bank, a member of the United Virginia Bank Shares,
with resources in excess of $500 million.
The First National Bank of Blackstone is located in
a town of 4,000, 80 miles southeast of Lynchburg. Its
resources of approximately $5 million are the smallest
117
of all the banks located in Nottaway County. Its competition consists of Citizens Bank & Trust Co. with resources of $5.7 million and the Bank of Crewe, located
10 miles northwest of Blackstone with assets of $8.9
million.
The capital funds of both the applicant and merging banks appear to be adequate in relation to their
deposits and volume of business transacted. Both
banks have had profitable operations for at least the
last 5-year period and it would appear that the resulting bank's earnings should be favorable.
The charter bank is considered capable and aggressive and has a staff of competent junior officers. The
president of the merging bank is considered capable
and experienced. However, it appears that the merging bank lacks depth of management and management
continuity is questionable.
The merging bank is located in Blackstone's retail
shopping district and has no branches or drive-in facilities. Because of its limited resources and lending
limits its ability to service the bank needs of its community is severely limited. The proposed merger
would make available to the commercial concerns,
merchants and individuals in this service area, a larger
lending limit, additional trust services, construction
loans and greater installment, and consumer-type
credit.
Because of the substantial distance separating the
two banks, no discernible competition between them
exists. Moreover, in view of the fact that the resulting bank would still be substantially smaller than its
primary competition in the Lynchburg area alone, no
appreciable concentration will result from the proposed
merger.
As the proposed merger would result in the elimination of a potential management problem in the merging bank; in substantially increased service to the
Blackstone area; in no adverse competitive effects or
tendency to monopoly; and, as it otherwise meets each
of the remaining statutory criteria favorably, we conclude that it is in the public interest and the application is, therefore, approved.
SEPTEMBER 22,1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
Fidelity National Bank with total assets in excess
of $84 million, operates 10 banking offices in Lynchburg and 6 additional banking offices in 5 towns located from 3 to 34 miles distant from Lynchburg. In
the past 5 years four banks with nine banking offices
have been merged. These four banks had total deposits of approximately $23 million at the time merged.
Fidelity National now proposes to merge First National Bank of Blackstone, with assets of $5 million and
one of the two banks of about equal size in the town of
Blackstone which is located about 80 miles distant from
Lynchburg. The remaining independent bank in
Blackstone, Citizens Bank & Trust Co., will hereafter
operate at a sharp competitive disadvantage as will
six other small banks in nearby towns that presently
compete with First National Bank of Blackstone.
While this merger, standing alone, will not have serious
anticompetitive effects it will cause the elimination of
one more independent bank and to that degree will increase concentration of banking in Virginia.
WILSHIRE NATIONAL BANK, LOS ANGELES, CALIF., AND HERITAGE NATIONAL BANK, LOS ANGELES, CALIF.
Name of bank and type of transaction
Total assets
Banking offices
In operation To be operated
Wilshire National Bank, Los Angeles, Calif. (14997), with
and Heritage National Bank, Los Ageles, Calif. (15463), which had
merged Oct. 15, 1965, under charter of the latter bank (15463), and under
title of "Heritage-Wilshire National Bank." The merged bank at date of
merger had
COMPTROLLER'S DECISION
On August 10, 1965, the Wilshire National Bank,
Los Angeles, Calif., and the Heritage National Bank,
Los Angeles, Calif., applied to the Office of the Comptroller of the Currency for permission to merge under
118
$11, 152,770
7, 878,465
19, 156, 745
2
1
3
the charter of the latter and with the title of HeritageWilshire National Bank.
The charter bank, organized in 1964 and opened for
business in January 1965, is located in Westwood Village, a suburb of the city of Los Angeles, adjacent to
the University of California. It is a residential area
without industry of consequence. At the present time,
the bank has IPC deposits of $5,282,000. It operates
no branches and has no application pending for one.
As opposed to Wilshire, Heritage has evidenced excellent deposit growth, but has found little demand for
lendable funds. Heritage's management is young,
experienced, and competent.
The merging bank which opened for business in
1962 is located in west Los Angeles. It now operates
one branch in Santa Monica and has received approval
for the establishment of a branch to be located in the
Pacific Palisades area of Los Angeles. Although
Wilshire has IPG deposits of $10,609,000, it has apparently reached a plateau on deposits, with no growth
potential noted in the immediate future. In addition,
the bank has lost its two leading executive officers by
resignation, leaving the bank without an effective
management team.
The area presently served by the participating banks
embraces approximately 40 square miles in Beverly
Hills and Santa Monica, and part of metropolitan Los
Angeles, Calif. The banks are situated about 12 miles
from downtown Los Angeles. The area in which the
banks are located is primarily residential with a Veterans' Administration complex, the University of California, and an extensive variety of retail trade
establishments. The nearest offices of the subject banks
are about 1.5 miles apart. The areas served by the
two banks are adjacent—but considered noncompetitive. The two banks do not carry reciprocal accounts
nor have they participated in the granting of any loans.
THE
There are only two common customers. Moreover,
within the service area of the resulting bank, there are
9 branches of Bank of America, 3 of Crocker-Citizens,
and 22 branches or head offices of other California
banks. Only one such bank is smaller in total deposits
than Heritage. The resulting bank would still be small
in relation to the other banks in the area. Obviously,
the competitive effect of this merger is de minimis.
The strengthening of the management of Wilshire;
the improved competitive position of the merged bank;
the lack of adverse competitive effect; and the satisfactory meeting of the remaining statutory criteria
indicate that this merger would be in the public
interest.
OCTOBER 14, 1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
Both participating banks are relatively small and
are located in an area of Los Angeles served by 10
other banks having a total of 35 offices. Among the
other banks in the area are nine branches of the
gigantic Bank of America and three branches of
Crocker-Citizens National Bank. The resulting bank
would have about 1.07 percent of the loans and 0.06
percent of the deposits of all commercial banks having
offices in this area.
The size of the resulting bank in relation to other
banks in the area would indicate that, except for the
elimination of direct competition involved, the proposed merger will have little or no effect on competition.
FIRST NATIONAL BANK OF ALEXANDRIA, ALEXANDRIA, PA., AND FIRST-GRANGE NATIONAL BANK OF
HUNTINGDON, HUNTINGDON, PA.
Name of bank and type of transaction
Total assets
Banki\ I offices
In operation To be operated
The First National Bank of Alexandria, Alexandria, Pa. (11263), with
and First-Grange National Bank of Huntingdon, Huntingdon, Pa. (31),
which had
.
merged Oct. 30, 1965, under charter and title of the latter bank (31). The
merged bank at date of merger had
COMPTROLLER'S DECISION
The merging bank is located in Alexandria, Pa., a
rural community with a present population of 381. It
is managed by its president who is now 77 years of age,
and two full-time female employees. This bank has
IPC deposits of $1,262,000 and a lending limit of
$1, 477, 374
1
21 081 780
2
22, 556, 154
3
$21,000. Its closest competitor, a branch of the second largest bank in Huntingdon County, is located 3
miles away. The merging bank is located 8 miles from
the charter bank.
The charter bank, with IPC deposits of $17.9 million,
is located in Huntingdon (population 7,200), the in119
dustrial center of Huntingdon County. The bank is
aggressive and has considerable management depth.
In November 1965, a major manufacturer will have
completed a relocation of its plant from Huntingdon to
Alexandria. The new plant will employ some 250
people compared to the town's total population of 381.
The charter bank has been the principal bank of deposit for this manufacturer and many of the 250 employees are long-time depositors. The Alexandria
bank, because of outmoded physical facilities, inadequate resources, and lack of management depth, is considered incapable of handling the influx of business
which will be occasioned by the opening of the new
plant. As a branch of First-Grange National's major
competitor is located only 3 miles from Alexandria,
the proposed merger is the most logical method by
which the charter bank can retain the business it now
has and by which the Alexandria bank can continue
to serve the needs of a substantially altered community.
Because of the mountainous nature of the entire
region in which these two banks are situated and the
resulting geographical delineation of service areas it is
not anticipated that there will be any adverse effect
upon any competitors of the charter bank. There is,
at the present time, no significant competition between
the two applicant banks because of the distance separating them.
As this merger is essential to serve the needs of the
community of Alexandria, as it will eliminate no competition nor have any adverse effect upon existing competition in the area, and as it otherwise satisfies all of
the statutory criteria, we find it to be in the public
interest. The merger is approved.
OCTOBER 29,1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
The First-Grange National Bank of Huntingdon,
Huntingdon, Pa., conducts commercial banking
through two offices located in Huntingdon, Pa. As of
June 30, 1965, it had total IPG deposits of $16,844,000
and total net loans and discounts of $12,269,000.
The First National Bank of Alexandria, Alexandria,
Pa., has one office located in Alexandria, Pa., about 8
miles from Huntingdon, Pa. As of June 30, 1965, it
had total IPG deposits of $1,160,000, and net loans and
discounts of $825,000.
If the proposed merger is approved, a competitor of
the First-Grange National Bank will be eliminated
and the number of banking alternatives remaining
available to banking customers in the Alexandria, Pa.,
area will be reduced to two. Concentration in the
area, which is already excessive, will be increased. To
this extent the proposed merger will have an adverse
effect on competition but in view of the small size of
the merging bank this effect could not be considered
significant.
COMMONWEALTH BANK, LOS ANGELES, CALIF., AND CITY NATIONAL BANK, BEVERLY HILLS, CALIF.
Name of bank and type of transaction
Total assets
Banking offices
In operation
Commonwealth Bank, Los Angeles, Calif., with
and City National Bank, Beverly Hills, Calif. (14695), which had
merged Nov. 2, 1965, under charter and title of the latter bank (14695). The
merged bank at date of merger had
COMPTROLLER'S DECISION
On September 7, 1965, an application wasfiledwith
the Office of the Comptroller of the Currency for approval of a merger of the Commonwealth Bank, Los
Angeles, Calif., into City National Bank, Beverly
Hills, Calif.
City National Bank opened in December 1953 and
is headquartered in Beverly Hills, Calif. It operates
13 branch offices, 12 within the Los Angeles metropolitan area, and 1 in Palm Springs, Calif. All but
three of these branches were established de novo by
120
$23, 256, 867
271, 166, 157
293, 905,452
To be operated
1
14
15
City National. The growth of this bank has been
rapid. As of June 30, 1965, its deposits amounted to
$226 million.
The Commonwealth Bank, Los Angeles, was chartered on January 2, 1963. It has no branches. As of
June 30, 1965, its deposits were $20 million.
Within a 3-mile radius of City National are located
57 banking offices and 22 savings and loan offices.
This area, which includes the merging bank, contains
branches of the larger area banks which are capable of
offering a substantially greater range of services than
Commonwealth. The proposed merger would introduce another substantial competitor into the merging bank's immediate area; it would substantially increase the lending limit available to Commonwealth's
customers. In addition, City National's trust services
would be made available to Commonwealth, which
does not have trust powers. Another factor favoring
this proposed merger will be an increase in management depth at Commonwealth, which has lost several
high echelon officers recently through resignation.
Despite the proximity of the two banks, there appears to be no overlapping of savings or loan accounts.
This lack of direct competition between the two may
be attributed to the separation of areas by freeways,
nature of the neighborhoods, and the substantially
higher income of the Beverly Hills area.
The resulting bank will remain a comparatively insignificant factor in Los Angeles banking with only 2
percent of the commercial bank deposits in Los Angeles
County.
The proposed merger will enable Commonwealth to
better serve the needs of its customers and to compete
more effectively in its immediate area and it will add
needed management depth to the merging bank. No
direct competition will be eliminated between the
two banks, and obviously no tendency to monopoly
would be created.
The proposed merger, therefore, satisfies all of the
statutory criteria and is approved.
NOVEMBER 1, 1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
The proposed merger would allow City National,
with $227 million in deposits and 14 offices in Los
Angeles County, to absorb Commonwealth, a unit bank
in west central Los Angeles County, with $21 million
in deposits, and would thereby increase City National's
share of total commercial bank deposits in Los Angeles
County from 1.8 to 2.0 percent. City National is the
largest of the smaller banks in Los Angeles County
while Commonwealth, a unit bank, is larger than some
44 other banks in the county. This merger would be
the third this year and the fourth since 1960 for City
National; it would be larger than the other three mergers combined and would increase City National's total
deposit accounts by 10 percent. It is a further and
stronger indication that City National may be developing a strong propensity to expand by merger rather
than by de novo branching in implementing its stated
policy of penetrating the entire county of Los Angeles
and the adjacent counties.
In view of the relatively small size of the acquired
bank when compared with the total Los Angeles banking market, the effect of this merger on competition in
that area, while adverse, will probably not be seriously
adverse. However, the increasing tempo of City National's merger activity as well as the increasing size
of the banks it is absorbing makes it imperative that
future acquisitions by it be cause for concern.
CITIZENS FIRST NATIONAL BANK OF FRANKFORT, FRANKFORT, N.Y., AND THE ONEIDA NATIONAL BANK &
TRUST CO. OF CENTRAL NEW YORK, UTICA, N.Y.
Banking offices
Total assets
Name of bank and type of transaction
In operation To be operated
Citizens First National Bank of Frankfort, Frankfort, N.Y. (10351), with
and the Oneida National Bank & Trust Co. of Central New York, Utica, N.Y.
(1392), which had
merged Nov. 5, 1965, under charter and title of the latter bank (1392). The
merged bank at date of merger had
COMPTROLLER'S DECISION
On September 7, 1965, the Oneida National Bank
& Trust Co. of Central New York, Utica, N.Y., and
the Citizens First National Bank of Frankfort, Frankfort, N.Y., applied to the Office of the Comptroller
of the Currency for permission to merge under the
charter and title of the former.
$9, 634,643
1
187, 710,850
16
197, 345,492
17
Utica, population 100,000, is a highly industrialized
city located in the center of New York State. The
charter bank, Oneida National, with IPC deposits of
$145 million maintains its main office and 3 of its 15
branches in this city. Also located in the community
is the Marine Midland Trust Co. of the Mohawk
Valley with IPC deposits of $133 million; the $186
121
million Savings Bank of Utica; and the Bank of Utica
with IPC deposits of $18.5 million.
Frankfortj N.Y., a small village of about 4,000, is located about 9 miles east of Utica in a predominantly
agricultural area. The nature of the farming industry
is rapidly changing as smaller farms are being combined
into large, mechanized operations which require substantial capital investment expenditures. Citizens National, the merging bank, is the only bank in Frankfort.
The record shows minimal competition between the
charter and merging banks. Although the closest
branch of the charter bank is located 2 miles from
Frankfort, there is little duplication of deposits between the two banks. Less than 10 percent of the
loans at the closest branch originated in the Frankfort
environs.
The Frankfort bank is also about 2 miles from the
nearest branch of Marine Midland, and 6 miles from
another. It is in competition with a branch of the
$500 million State Bank of Albany, some 10 miles
south, which has been actively soliciting bank audits
in the area.
The merging bank has excellent management, but
competitive pressures have required it to raise its interest rate on time deposits. The limited area served
by the bank has also limited the availability of loanable funds which would enable it to defray the increased interest costs. The proposed merger will provide the Frankfort bank with a source of such funds
which will enable it to meet the increased capital needs
of its community.
The merger would also provide the Frankfort bank
with a substantially larger loan limit; and it will make
trust, investment and estate planning services available to the customers of the merging bank.
Although the proposed merger will provide Frankfort with a bank more capable of competing with others
in the area, the transaction will add only an insignificant 1 percent of county deposits to those of the charter
bank and will not eliminate any existing competition
between the two.
We find that needs of the community of Frankfort
can best be served by the merger. As all other statutory
tests are favorable and as there will be no adverse
effect upon competition, this merger is in the public
interest. It is, therefore, approved.
NOVEMBER 5, 1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
The Oneida National Bank & Trust Go. of Central
New York, Utica, N.Y. (hereinafter "Oneida Bank"),
proposes to merge the Citizens First National Bank
122
of Frankfort, Frankfort, N.Y. (hereinafter "Citizens
Bank"). Oneida Bank is a large multibranch institution with total loans of over $93 million and total
deposits of over $142.7 million. These figures constitute 41.4 percent and 43.4 percent, respectively, of
the service area total. Another multibranch institution, the Marine Midland Trust Co. of the Mohawk
Valley (a subsidiary of Marine Midland Corp.) accounts for 44.2 percent and 40.4 percent, respectively,
of the area's total loans and deposits.
Citizens Bank is a small unit bank operating within
Oneida Bank's two-county service area. It has loans
of $6 million (2.7 percent of the area total) and
deposits of $8 million (2.4 percent of the area total).
The merger will eliminate the competition which
now exists between the participants. The application
states that the amount of competition between the two
is minimal and that the Oneida Bank does not actively
solicit loan or deposit business in the Frankfort area.
The accuracy of that statement is questionable, in
view of the location of the participants. The Ilion
branch of Oneida Bank is only 2 miles east of Frankfort
and the Mohawk branch is only 3 miles east. Marine
Midland also has three branches within 3 miles of
Frankfort. Moreover, many Frankfort residents commute to Utica for employment and shopping and it
would be reasonable to conclude that the two chain
banks compete with Citizens Bank for the commuter
business. Thus, there appears to be a significant
amount of competition between the participants and
the merger, if consummated, would eliminate this
competition.
The merger would also contribute to the very serious
degree of concentration which now exists in the twocounty area. The Oneida Bank's deposits and loans
would increase by 2.4 and 2.7 percent to 45.8 and 44.1
percent, respectively, of the area total. If the merger
is consummated, Oneida Bank and Marine Midland
will account for 88.3 percent and 86.2 percent, respectively, of the area's loans and deposits. Although
the increased concentration attributable to this one
merger might not seem significant, the Supreme Court
has made it clear that "if concentration is already great,
the importance of preventing even slight increases in
concentration and so preserving the possibility of
eventual deconcentration is correspondingly great."
The proposed merger will eliminate a banking
alternative from the service area. Residents of Frankfort presently can bank at either Citizens Bank or
one of the branches of the two majors. The merger
will eliminate the opportunity to choose between a
small independent or one of two large branch systems.
The proposed merger will perhaps have its greatest
impact on the four remaining independent banks. As
the banking power becomes increasingly concentrated,
the independents will find it increasingly difficult to
compete effectively. Combined loans and deposits of
the four will be only 11.7 and 13.8 percent, respectively,
of the area totals. Each will have less than 5 percent
of total loans and 6 percent of total deposits, and as
their ability to compete diminishes, the probability of
a merger with one of the two majors increases. In
short, unless the trend toward concentration in the
service area is halted, the independent banks will be
unable to survive and the Oneida-Herkimer area will
be totally dominated by two banks. Thus, it is important to preserve the remaining independent competitors.
We, therefore, feel that the proposed merger would
have both cumulative and potential anticompetitive
effects.
BANK OF PHOEBUS, HAMPTON, VA., AND VIRGINIA NATIONAL BANK, NORFOLK, VA.
Banking offices
Name of bank and type of transaction
Total assets
In operation To be operated
Bank of Phoebus, Hampton, Va., with
and Virginia National Bank, Norfolk, Va. (9885), which had
merged Nov. 5 1965, under charter and title of the latter bank (9885). The
merged bank at the date of merger had
$8,353, 174
505,266,005
*530,101,174
2
61
63
•Includes Merchants' National Bank of Hampton, Va., which merged at the same time.
COMPTROLLER'S DECISION
On September 23, 1965, the Bank of Phoebus,
Hampton, Va., and the Virginia National Bank, Norfolk, Va., applied to the Office of the Comptroller of
the Currency for permission to merge under the charter
and with the title of the latter. There was also filed
on the same date an application for permission to
merge the Merchants' National Bank of Hampton,
Hampton, Va., into the Virginia National Bank.
Norfolk, with a population of about 305,000, is
located on Hampton Roads and Chesapeake Bay, 100
miles southeast of Richmond. This area is highly
industrialized and the many military establishments
provide a major source of employment.
The charter bank, with I PC deposits of $418 million,
is the second largest bank in Virginia and presently
operates 54 banking offices in 28 cities or towns in 4
general geographical areas in Virginia.
Hampton, with a population of 104,000, is approximately 15 miles from Norfolk. The merging bank,
with I PC deposits of $7 million, is the smallest of eight
banks in the Hampton-Newport News area. The
bank faces a serious management succession problem
upon the imminent retirement of the president. Competition in this area is provided byfivebranches of the
largest bank in the State, First & Merchants National
Bank, by the Old Point National Bank, and by two
holding companies, the United Virginia Bankshares
through its member bank, Citizens & Marine Bank, and
the Virginia Commonwealth Corp. through its member
banks, the Bank of Warwick and the Bank of Virginia
in Newport News.
No competition between the two merging banks will
be eliminated by the merger, since the charter bank
does not have a branch in the Hampton-Newport News
portion of the Tidewater complex and Norfolk and
Hampton are approximately 15 miles apart and are
separated by the harbor of Hampton Roads. This
merger will not alter the competitive position of the
Virginia National Bank throughout its service area.
The applicant will remain the second largest bank in
the State. The merging bank because of its size has
been unable to adequately serve the Hampton-Newport
News area. The resulting merger will solve the management problem of the merging bank, provide a bank
with a larger lending limit, additional trust services,
and a more extensive range of installment and consumer credit, thus encouraging more vigorous banking
competition in the area.
As noted there is pending another application to
merge the charter bank with the Merchants' National
Bank of Hampton, Hampton, Va. This application is
treated in a separate opinion. The Bank of Phoebus
and the Merchants' National Bank have separate serv123
ice areas separated by the Hampton River and because
of the size and location of the two merging banks vis-avis the charter bank no competition between them will
be eliminated. The resulting merger would introduce
into the Hampton-Newport News area a bank better
able to meet the needs of this growing community.
Applying the statutory criteria to the proposal, we
conclude that it is with public interest and the application is, therefore, approved.
NOVEMBER 5,1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
Virginia National Bank, the second largest bank in
Virginia, proposes to merge Bank of Phoebus, a bank
with two banking offices in Hampton and assets of
$8,061,000. Filed concurrently with this application
is the application by Virginia National to merge Merchants' National Bank of Hampton, Hampton, Va., a
bank with six banking offices and assets of $15,760,000.
The town of Newport News adjoins Hampton; Hampton banks secure business from Newport News and
Newport News banks secure business from Hampton.
Should Virginia National be permitted to merge the
above two banks, there will remain in Hampton but
one relatively small bank, and as a result of a series of
mergers since April of 1963, there will remain in Newport News but one comparatively small independent
bank. Banking in Newport News and Hampton will
be dominated by the two largest banks in Virginia and
by two very large bank holding companies.
Since April of 1963, Virginia National has merged
10 banks which operate 33 banking offices in 28 cities
and towns in Virginia, and their combined deposits at
the time merged represent over 43 percent of Virginia
National's deposits. The proposed merger extends
Virginia National's aggressive policy of growth and expansion by merger, and with the concurrent application of Virginia National to merge Merchants' National
Bank of Hampton, still further increases the size and
power of Virginia National and adds to the existing
concentration of banking in Virginia. Moreover, the
proposals reduce from four to two the number of small
independent banks in the Hampton-Newport News
area. The effect of this trend on competition will be
adverse.
THE MERCHANTS' NATIONAL BANK OF HAMPTON, HAMPTON, VA., AND VIRGINIA NATIONAL BANK, NORFOLK, VA.
Name of bank and type of transaction
Total assets
Banking offices
In operation
The Merchants' National Bank of Hampton, Hampton, Va. (6778), with.
and Virginia National Bank, Norfolk, Va. (9885), which had
merged Nov. 5, 1965, under charter and title of the latter bank (9885).
The merged bank at the date of merger had
$16,922,002
505, 266, 005
*530, 101, 174
To be operated
6
55
61
•Includes Bank of Phoebus, Hampton, Va, which merged at the same time.
COMPTROLLER S DECISION
On September 23, 1965, the Merchants' National
Bank of Hampton, Hampton, Va., and the Virginia
National Bank, Norfolk, Va., applied to the Office of
the Comptroller of the Currency for permission to
merge under the charter and with the title of the latter.
There was also filed on that date an application for
permission to merge the Bank of Phoebus, Hampton,
Va., into the Virginia National Bank.
Norfolk, with a population of about 305,000, is located on Hampton Roads and Chesapeake Bay, 100
miles southeast of Richmond. This area is highly industrialized and the many military establishments provide a major source of employment.
The charter bank, with IPC deposits of $418 million,
is the second largest bank in Virginia and presently op124
erates 54 banking offices in 28 cities or towns in Virginia located within 4 broadly defined geographical
areas of Virginia.
Hampton, with a population of 104,000, is approximately 15 miles from Norfolk. The service area of the
merging bank comprises both the city of Hampton and
Newport News, and has an estimated population of
241,000. This area, which has experienced a strong
population increase, is one of the most rapidly growing areas in the State of Virginia. Military establishments provide a major source of employment.
The merging bank, with IPC deposits of $14 million
is the fifth largest of eight banks in the HamptonNewport News area. It presently operates five
branches. Competition in this area is provided by five
branches of the largest bank in the State, First &
Merchants' National Bank, two holding companies,
United Virginia Bankshares through its member bank,
Citizens & Marine Bank, and Virginia Commonwealth
Corp. through its member banks, the Bank of Warwick
and the Bank of Virginia in Newport News, and the
Old Point National Bank.
No competition between the two merging banks will
be eliminated by the merger since the charter bank does
not have a branch in the Hampton-Newport News
portion of the Tidewater complex. Norfolk and
Hampton are approximately 15 miles apart and are
separated by the Harbor of Hampton Roads. This
merger will not alter the competitive position of the
Virginia National Bank throughout its service area.
The applicant will remain the second largest bank in
the State.
The proposed merger will provide the rapidly growing Hampton-Newport News area with the banking
services required in a community of this size. The resulting bank will provide larger resources, additional
trust services, ability to service the financial needs of
the area's political subdivisions through its bond department, and a larger volume and variety of installment and consumer-type credit.
There is no competition between the two banks involved in this merger. The additional resources which
would be available to the charter bank are insignificant
in comparison with its present asset position and could
have no effect upon the competitive situation in any
area in which the charter bank is now located.
As noted there is pending another application to
merge the charter bank with the Bank of Phoebus,
Hampton, Va. The Bank of Phoebus and the Merchants' National Bank have separate service areas separated by the Hampton River. Because of the size and
location of the merging banks vis-a-vis the charter
bank, no competition between them will be eliminated
and the resulting merger would introduce into the
Hampton-Newport News area a bank better able to
meet the needs of this growing community. A sepa-
rate opinion is being rendered as to the Phoebus
merger.
Applying the statutory criteria to the proposal, we
conclude that it is in the public interest and the application is, therefore, approved.
NOVEMBER 5, 1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
Virginia National Bank, the second largest bank in
Virginia, proposes to merge Merchants' National Bank,
a bank with six banking offices in Hampton and assets
of $15,760,000. Filed concurrently with this application is the application by Virginia National to merge
Bank of Phoebus, Hampton, a bank with two banking
offices and assets of $8,061,000. The town of Newport News adjoins Hampton. Hampton banks secure
business from Newport News and Newport News
banks secure business from Hampton. Should Virginia
National be permitted to merge the above-two banks,
there will remain in Hampton but one relatively small
bank, and, as a result of a series of mergers since April
of 1963, there will remain in Newport News but one
comparatively small independent bank. Banking in
Newport News and Hampton will be dominated by the
two largest banks in Virginia and by two very large
bank holding companies.
Since April of 1963, Virginia National has merged
10 banks which operate 33 banking offices in 28 cities
and towns in Virginia, and their combined deposits at
the time merged represent over 43 percent of Virginia
National's deposits. The proposed merger extends
Virginia National's aggressive policy of growth and
expansion by merger, and with the concurrent application of Virginia National to merge Bank of Phoebus,
still further increases the size and power of Virginia
National and adds to the existing concentration of
banking in Virginia. Moreover, the proposals reduce
from four to two the number of small independent
banks in the Hampton-Newport News area. The
effect of this trend on competition will be adverse.
PATRICK COUNTY BANK, STUART, VA., AND THE FIRST NATIONAL BANK OF MARTINSVILLE AND HENRY COUNTY,
MARTINSVILLE, VA.
Banking offices
Name of bank and type of transaction
Total assets
In operation
Patrick County Bank, Stuart, Va., with
and the First National Bank of Martinsville and Henry County, Martinsville,
Va. (7206), which had
merged Nov. 6, 1965, under charter and title of the latter bank (7206). The
merged bank at date of merger had
$5,673, 904
1
38,869,072
5
44, 204,402
To be operated
6
125
COMPTROLLER'S DECISON
On September 24, 1965, Patrick County Bank,
Stuart, Va., and the First National Bank of Martinsville and Henry County, Martinsville, Va., applied to
the Office of the Comptroller of the Currency for
permission to merge under the charter and with the
title of the latter.
Martinsville, population 18,800, is the county seat
of Henry County. This city is one of the major furniture manufacturing centers of the country and also
contains a large DuPont nylon plant employing approximately 4,500 persons. The low unemployment
rate of 1.7 percent is indicative of the strength of the
Martinsville economy.
Stuart, population 974, is in Patrick County, which
is nearly three-fourths in forest land. There is some
farming in the area, but the main source of revenue is
from textile mills in Stuart and a fabric plant in nearby
Woolwine. While Stuart has not enjoyed a large
increase in population, its growth between 1960 and
1963 indicates the beginning of a trend.
The charter bank, with IPC deposits of $30 million,
has six offices in Martinsville and nearby towns. It
competes in Martinsville with the $23 million Piedmont Trust Bank and the Martinsville branch of the
$470 million Virginia National Bank. In addition,
several banks in the Henry County area, the statewide
Virginia banks, and a few banks in North Carolina
attract customers in the charter bank's trade region.
The merging bank, with IPC deposits of $4.4 million, is one of two banks in Stuart. With a single
office, Patrick County Bank competes with the $5 million First National Bank of Stuart, which has one
branch in Stuart. There are eight other banks, some
with several branches, within a 30-mile radius of the
merging bank.
The charter bank is located 29 miles from the head
office of the Patrick County Bank. Although there
appears to be a slight overlap of the service areas of
the two banks, the amount of business they derive
from each other's area is insignificant. In view of
the substantial compeition from banks in the charter
bank's area, this merger, involving two small banks,
would not have any anticompetitive effect.
The proposed merger will result in the introduction
of substantially increased banking services into Stuart.
126
The resulting bank will offer a wider range of loans not
now available there, will permit a larger lending limit
to serve better the industries in and around Stuart,
and will make trust services available in Stuart for the
first time. The addition of the resources of the merging bank to those of the charter bank will also make increased automation of the resulting bank more feasible
than it has been for either bank alone.
The management of the merging bank has been able,
but its scope of action has been severely limited by
small resources. The combination of the leaders of
the applicant banks should result in the establishment
of a very effective management team for the resulting
bank.
Having considered the merger application. in the
light of the statutory criteria, this office has determined
that it is in the public interest and the application is,
therefore, approved.
NOVEMBER 4,
1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
The First National Bank of Martinsville and Henry
County, Martinsville, Va., with total assets of $36,838,000, and five branch offices, proposes to merge
with Patrick County Bank of Stuart, Va., which has
total assets of $5,379,000, and to operate the acquired
bank as a branch office. The merging banks are located 29 miles apart in a mixed agricultural and manufacturing area with manufacturing increasing.
Neither of the participating banks has been involved
in a merger or acquisition during the past 10 years.
A degree of competition between the merging banks
will be eliminated. The resulting bank will continue
to rank second in the Martinsville area, where banking
resources are not highly concentrated.
The merger would remove one of two small, independent banks in the primary service area of Stuart,
and would require that the remaining bank, which
operates one branch, compete with a branch office of
the second ranked bank in the overall service area.
To this extent the proposed merger may have an
adverse effect on competition; but, in view of the
character of the area and the comparatively small size
of the merging banks, we do not deem the effect signifi-
CENTURY BANK OF CHICAGO, CHICAGO, 111., AND THE NATIONAL CITY BANK IN CHICAGO, CHICAGO, 111.
Banking offices
Name of bank and type of transaction
Total assets
In operation To be operated
Century Bank of Chicago, Chicago, 111., with
was purchased Nov. 19, 1965, by the National City Bank in Chicago, Chicago,
111. (14562), which had
After the purchase was effected, the receiving bank had
COMPTROLLERS DECISION
Century Bank of Chicago was opened on July 20,
1964, to fill a banking void left in the area of Pulaski
and Madison Streets, Chicago, by the merger of the
National Bank of Commerce with the Central National
Bank. The opening was made possible by the support
of stockholders of National City Bank in Chicago upon
assurances of area support of the new institution.
After 15 months of existence, it has become apparent
that the area in which it is located is economically
incapable of supporting a bank.
Of $1.5 million in savings deposits obtained by Century, only $407,000 are area deposits; less than half
of commercial deposits are from the bank's area; and
in 13 months of existence, Century Bank had been
able to consummate loans totaling only $20,000 to area
merchants. An offering of stock to area residents and
merchants resulted in a distribution of less than 2
percent.
Century Bank has been dependent upon National
City, or associates thereof, for its continued existence.
National City has caused substantial deposits to be
made in Century, and has shared a number of loans
with the new bank on a participation basis. In addition, management of Century has been provided by
National City.
There is no competition between the two banks.
The proposed purchase of assets and assumption of
$2,762,797
1
29, 604,449
29, 703, 609
1
1
liabilities of Century Bank of Chicago by National City
Bank in Chicago is a recognition that Century is not
being supported by its area and that there is no reasonable prospect of such support materializing. Century Bank is not a competitive factor in Chicago
banking.
Accordingly, this purchase of assets and assumption
of liabilities of Century Bank of Chicago by National
City Bank in Chicago is clearly within the statutory
criteria as being in the public interest. The transaction is approved.
NOVEMBER 2, 1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
Century was organized during 1964 by officers of
National City to provide a bank in the Pulaski-Madison area of Chicago after National Bank of Commerce's
merger with Central National.
The majority of Century's stock is owned by shareholders of National City, and some of the same persons
serve as officials and directors of both banks. Century
has received limited support from the Pulaski-Madison
area and appears to be heavily dependent for its success upon business given it by persons associated with
National City.
The proposed acquisition of assets and assumption
of liabilities of Century by National City would not
appear to have an adverse effect upon competition.
THE SHARON CENTER BANKING CO., SHARON CENTER, OHIO, AND THE OLD PHOENIX NATIONAL BANK OF MEDINA,
MEDINA, OHIO
Banking offices
Name of bank and type of transaction
Total assets
In operation To be operated
The Sharon Center Banking Co., Sharon Center, Ohio, with
and the Old Phoenix National Bank of Medina, Medina, Ohio (4842), which
had
merged Nov. 27, 1965, under charter and title of the latter bank (4842). The
merged bank at the date of merger had
$3, 631, 856
1
47, 855,430
4
51, 487, 285
5
127
COMPTROLLER'S DECISION
On August 25, 1965, the Old Phoenix National
Bank of Medina, Medina, Ohio, and the Sharon
Center Banking Co., Sharon Center, Ohio, applied to
the Office of the Comptroller of the Currency for
permission to merge under the charter and with the
title of the former.
Medina, with an estimated population of 9,800, is
a residential, commercial, and industrial city located
18 miles west of Akron and 18 miles south of Cleveland. There are some 45 manufacturing plants in
the Medina area. Agriculture also contributes substantially to the local economy.
Sharon Center, the headquarters of the merging
bank, is a community of approximately 300. Located
11 miles southwest of Medina, Sharon Center is primarily oriented toward agriculture. With the completion of a new highway that should shorten driving
time to the village from Cleveland to 35 minutes,
the Sharon Center area is becoming a prime site for
suburban residential development. The prospects
are, consequently, encouraging for the economic
growth of Sharon Center.
Continuously operating since its founding in 1857,
the charter bank has $38.9 million in IPC deposits.
It competes in Medina County with six other banks
and faces strong competition from banks in Akron.
The merging bank, with $2.1 million in IPC deposits,
is the sole bank in Sharon Center. It also faces competition from nearby branches of Akron banks.
The convenience and needs of the Sharon Center
community will be served by this merger. While there
has been no industrial development, there is substantial residential building activity in and around the
community. The merging bank's lending limit is too
small to finance either the larger retail establishments or most of the single family dwellings being
constructed or planned. The larger capital of the
resulting bank will solve this problem. In addition,
the resulting bank can offer automation, which the
merging bank lacks, and a trust department for new
suburban residents. The merger is, therefore, essential if the needs of the community are to be met.
The effect of this merger upon competition will not
be detrimental because of the distance between the
merging banks, and the active competition of nearby
banking offices, particularly the Akron banks and their
branches. The merger will improve the competitive
structure in Medina County by creating a stronger
bank capable of offering more vigorous competition
to the banks and savings and loan associations in
Akron which attract business from the county.
This merger is essential to serve the Sharon Center
community; it will have no detrimental effect on
competition nor will it tend to monopoly, and it otherwise satisfies the statutory criteria. Accordingly, we
approve this merger as being in the public interest.
NOVEMBER 22, 1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
The Old Phoenix National Bank of Medina, Medina, Ohio, a medium-sized commercial bank, with
its head office and three branches in Medina County,
proposes to acquire by merger the Sharon Center
Banking Co., and Sharon Center, 7 miles southeast of
Medina and 11 miles west of Akron, Ohio. Although
the Sharon Bank's service area is included in the larger
service area of the Phoenix Bank, and there apparently
is some competition between the banks, it does not
appear that this competition is substantial enough for
the merger to affect adversely commercial banking in
the combined service areas. The two banks, on the
other hand, are subjected to strong competitive pressure
from Akron, Ohio, an area with a high degree of concentration in commercial banking and financial resources vastly greater than those of the merging banks.
THE BANK OF LEXINGTON, LEXINGTON, S.C., AND THE FIRST COMMERCIAL NATIONAL BANK OF SOUTH CAROLINA,
COLUMBIA, S.C.
Name of bank and type of transaction
Total assets
Banking offices
In operation To be operated
The Bank of Lexington, Lexington, S.C., with
and the First Commercial National Bank of South Carolina, Columbia, S.C.
(13720), which had
merged Dec. 10, 1965, under the charter of the latter bank (13720), and with
title of "The First National Bank of South Carolina." The merged bank
at the date of merger had
128
$4, 265, 937
163,419,783
167, 247, 483
38
COMPTROLLER S DECISION
On September 27, 1965, the Bank of Lexington,
Lexington, S.G., and the First Commercial National
Bank of South Carolina, Columbia, S.C., applied to
the Office of the Comptroller of the Currency for
permission to merge under the charter of the latter and
with the title, "The First National Bank of South
Carolina."
Columbia is the capital of South Carolina and the
center of the largest metropolitan area in the State.
With a population slightly in excess of 260,000, this
area depends on a diverse economic base. Several
national manufacturing corporations have production
facilities in Columbia. The geographical position of
the city has made it the largest retail shopping area in
South Carolina. In addition, the State government is
a major employer.
Lexington, a community of about 1,100 inhabitants,
is located 13 miles west of Columbia. Textile manufacturing is chief among its industries. Because of its
proximity to Columbia, Lexington is largely dependent
upon the capital and the surrounding area for employment and retail trade.
The charter bank, with $112 million in I PC deposits,
competes throughout the State with the $210 million
Citizens & Southern National Bank of South Carolina
and the $374 million South Carolina National Bank.
The merging bank, with $3 million in I PC deposits,
operates a single office and is the only bank in Lexington. The nearest offices of the applicant banks are 10
miles apart and there are no mutual accounts, either
loans or deposits.
The State of South Carolina, with a population of
2.5 million, has undergone a rapid change from a
predominantly agricultural economy to a diversification of industry and commerce. Over $2.25 billion
have been expended by new and expanding industrial
concerns in the past 15 years. This industrial expansion has necessitated the development of a banking
structure capable of concentrating sufficient capital to
accommodate and assist in the development of the
economy.
226-601 — 07
10
As there is no other bank in Lexington, the proposed
merger could have no effect upon competition in that
community other than providing the benefits which
would naturally flow from the increased services which
could be provided by the larger bank. There is no
competition being eliminated between the charter bank
and the merging bank.
As the merger will provide succession of management, more available credit limits to local industry,
and the introduction of new banking services to the
community in which the merging bank is located, and
as no competition is being eliminated, this merger is
determined to be in the public interest. It is, therefore,
approved.
DECEMBER 6,
1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
This is an application by the third largest commercial bank in South Carolina to merge a small, independent bank located in the suburbs of the headquarters city of the charter bank. The latter has an
announced policy of expanding by merger and owes
the larger part of its recent growth to the acquisition
of nine banks during the past decade.
The 4 largest banks in South Carolina, of which
group the charter bank is one, have acquired about 28
banks during the past 10 years. This acquisitive trend,
which shows no signs of abating, has contributed to
the very high degree to which the commercial banking
resources of South Carolina are concentrated within
the control of a few dominant statewide institutions.
Implicit in the proposed merger is the fact that there is
no future for independent banks in South Carolina.
Approval of this merger would render it difficult for
other small independents to survive. The history of
bank mergers in South Carolina indicates that the proposed merger may induce still further acquisitions
and thus aggravate the tendency toward monopoly in
commercial banking within that State.
Any furtherance of this trend will have an adverse
effect upon competition in commercial banking in
South Carolina.
129
UNITED STATES NATIONAL BANK IN JOHNSTOWN, JOHNSTOWN, PA., AND CAMBRIA COUNTY NATIONAL BANK,
CARROLLTOWN, CARROLLTOWN, PA.
Banking offices
Name of bank and type of transaction
Total assets
In operation
United States National Bank in Johnstown, Johnstown, Pa. (13781), with
and Cambria County National Bank, Carrolltown, Carrolltown, Pa. (5855),
which had
consolidated Dec. 11, 1965, under charter and title of the former bank (13781).
The consolidated bank at the date of consolidation had
COMPTROLLER'S DECISION
On October 4, 1965, an application was filed with
the Office of the Comptroller of the Currency for
approval of the consolidation of Cambria County National Bank, Carrolltown, Pa., and United States National Bank in Johnstown, Johnstown, Pa., under the
charter and with the title of the latter.
Johnstown, head office of the charter bank, has an
urban population of 54,000 and a metropolitan area
population of 113,000. The city is the industrial center of both Cambria and Somerset Counties where the
charter bank operates offices. The economy of Johnstown is based upon heavy industry which, until recently, has been characterized by high unemployment.
However, the present unemployment rate stands at 3.4
percent, and the future appears optimistic. Approximately 85 percent of the work force is engaged in steelmaking, steel fabricating, coal mining, and the manufacturing of refractories. Future growth prospects of
the area are dependent upon stability in the aforementioned industries and economic diversification.
Carrolltown, located 26 miles north of Johnstown,
has a population of 1,500 and is an old, established
rural community which receives its major economic
support from many prosperous farms in the area and
employment in industries located in the greater Johnstown area. The town has a small business district
which has changed little over the years. Future
growth prospects appear minimal.
The economic center of the Cambria County National Bank's service area is Ebensburg, located 19 •
miles north of Johnstown. This town, wherein is located a branch office of the Cambria County National
Bank, is the county seat of Cambria County and has a
population of 5,000. The economic base is provided
by the county governmental structure, a State hospital,
a State school for retarded children, and a new $30
million coal cleaning and processing plant employing
200 persons.
130
$83, 875, 784
8
16,939,534
3
To be operated
98, 840, 257
11
The charter bank, with $68 million in IPC deposits, is the largest bank in Cambria and Somerset
Counties. It operates a head office and two branches
in Johnstown with five additional offices in Somerset
County and the southern half of Cambria County.
Competition is provided in these markets by 17 banks
operating 32 offices in Cambria and adjacent counties.
The Cambria County National Bank, with $11.1 million in IPC deposits, operates three branches in the
northern half of Cambria County. Competition is provided by 9 banks operating 12 offices in Cambria and adjacent counties.
The consolidating banks do not compete with each
other as their service areas join but do not overlap.
Not only does the topography and character of the
market areas act as natural barriers, but their nearest
offices are separated by a distance of 9 miles.
As a result of the proposed consolidation, an increased rate on savings deposits, trust facilities, automatic data processing, and a sorely needed increase in
lending capacity will be introduced into the area now
served by the merging bank.
Applying the statutory criteria to the proposed consolidation, we conclude that it is in the public interest
and it is, therefore, approved.
DECEMBER 6,1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
The United States National Bank of Johnstown
conducts commercial banking through eight offices located in the Johnstown, Pa. area. As of June 30, 1965,
it had total IPC deposits of $68,007,200 and total net
loans and discounts of $37,232,800.
Cambria County National Bank operates three offices located in Cambria County, one being at the
county seat of Ebensburg, which is located about 6
miles from a branch of the United States National
Bank located in Nanty Glo, Pa. These two branches
compete to some degree with each other. As of June
30, 1965, Cambria County National Bank had total
IPC deposits of $11,118,300 and total net loans and
discounts of $7,831,700.
The proposed merger will increase banking concentration in the Johnstown area and increase the size
of the largest bank in this area by about 15 percent.
This merger, if approved, will eliminate a growing
bank which in the future could offer substantial competition to United States National. Although this
merger, in and of itself, would not appear to have a
significant adverse effect on competition, the elimination of potential competition and the furtherance of
the trend toward greater banking concentration is considered adverse.
THE CITIZENS NATIONAL BANK IN WEST MILTON, WEST MILTON, OHIO, AND THE FIRST TROY NATIONAL BANK &
TRUST CO., TROY, OHIO
Name of bank and type of transaction
Total assets
Banking offices
In operation To be operated
The Citizens National Bank in West Milton, West Milton, Ohio (14264), with. . .
and the First Troy National Bank & Trust Co., Troy, Ohio (3825), which had..
merged Dec. 15, 1965, under charter of the latter bank (3825) and under title
of "The First National Bank & Trust Co." The merged bank at the date
of merger had
COMPTROLLER'S DECISION
On October 22, 1965, the First Troy National Bank
& Trust Co., Troy, Ohio, and the Citizens National
Bank, West Milton, Ohio, applied to the Office of the
Comptroller of the Currency for permission to merge
under the charter of the former and with the title,
"The First National Bank & Trust Co."
Troy, population 15,000, the county seat of Miami
County, is located 20 miles north of Dayton. The
economic activity of the surrounding trade area, which
has a population of 20,000, is both industrial and
agricultural with the latter consisting primarily of
production of livestock and grain. New house construction in the area is important while retail sales in
the community are estimated at $25 million annually.
West Milton, a residential community of 2,500 inhabitants, is located 16 miles north of Dayton and 10
miles southwest of Troy. Farming dominates the
economy of the surrounding trade area, which has a
population of 9,000, while industrial activity is limited
to the operation of several small plants employing less
than 100 people.
The charter bank operates its main office and one
branch office in Troy, while a second branch office is
located in the adjacent town of Tipp City. Strongest
competition for the $32 million charter bank is afforded
by the Miami Citizens National Bank & Trust Co.
which is the second largest bank in the area. This
bank, which is located in Piqua, Ohio, has branch
offices in both Troy and Tipp City, Ohio. Included
$4,725,818
33, 959, 044
38, 684, 862
1
3
4
among the other banks in the area are the Piqua National Bank, Piqua, Ohio; the Bradford National Bank,
Bradford, Ohio; and the Citizens National Bank, Covington, Ohio.
The merging bank, with IPC deposits of $3.3 million, has a single banking office and is the sixth largest
operating in the area composed of Miami County and
the fringe area of Montgomery County. Its principal
competitor is the Farmers State Bank of Englewood,
Ohio, located 5.5 miles south; additional competition
is offered by the Citizens National Bank of Covington,
Ohio, through its Pleasant Hills branch, located 6
miles north. Competition is also afforded by the
larger financial institutions located in Dayton.
Consummation of the proposed merger will increase
the lending capacity of the merging banks and thereby
enable the resulting bank to handle the needs of all
but the two largest industries in Troy. In addition, a
variety of commercial services will be offered to the
West Milton area for the first time. Among these will
be trust services, now offered only by Dayton banks.
Other benefits of the merger will be stronger management in the West Milton area and greater efficiency.
Competition between the two banks is negligible.
The banks have only one customer in common while
each does very little business in the principal trade area
of the other. The merger will heighten competitive
activity in the West Milton area by strengthening the
competitive position of the merging bank particularly
in relation to the larger Dayton banks.
131
Applying the statutory criteria to the proposal, we
conclude that it is in the public interest and the application is, therefore, approved.
DECEMBER 8, 1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
The First Troy National Bank & Trust Co., of
Troy, Ohio, with total assets of $32,896,000 and two
branch offices, proposes to merge with the Citizens
National Bank of West Milton, Ohio, which has total
assets of $4,192,000, and to operate the merged bank as
a branch office.
Applicant bank is first and merging bank is last
in rank among five banks operating in the combined
service area of the participating banks. The main
offices of the merging banks are located 10 miles apart
in a mixed manufacturing and agricultural area.
Neither of the participating banks has been involved
in a merger or consolidation during the past 5 years.
The proposed merger will eliminate some degree of
competition between two of five competing banks in
the combined service area and reduce the banking
alternatives from five to four. Applicant bank's dominant position in Miami County will be considerably
enhanced and the effect on competition will be adverse.
DOUGLAS COUNTY STATE BANK, ROSEBURG, OREG., AND FIRST NATIONAL BANK OF OREGON, PORTLAND, OREG.
Banking offices
Name of bank and type of transaction
Total assets
In operation
Douglas County State Bank, Roseburg, Oreg., with
and First National Bank of Oregon, Portland, Oreg. (1553), which had
merged Dec. 22, 1965, under charter and title of the latter bank (1553).
The merged bank at the date of merger had
COMPTROLLER'S DECISION
On October 8, 1965, the First National Bank of
Oregon, Portland, Oreg., and the Douglas County
State Bank, Roseburg, Oreg., applied to the Comptroller of the Currency for permission to merge under
the charter and with the title of "First National Bank
of Oregon."
The First National Bank of Oregon, the acquiring
bank, opened for business in 1866 and is headquartered
in Portland, Oreg. It operates 103 branch offices,
64 percent of which are located in the northwestern
corner of the State around the Portland area. As
of June 30, 1965, First National showed total assets
of $1,251,351,000, IPC deposits of $946,518,000, total
deposits of $1,114,041,000, and loans and discounts
totaling $725,299,000.
Portland, the principal city in Oregon, has a population of 380,000, and, together with a metropolitan area
composed of 3 counties, has an urban area containing
600,000 persons on the Oregon side of the Columbia
River. This represents almost one-third of the
population of the State. Industry and commerce are
diversified in the Portland area, which is served by
transcontinental railroads and a major port for oceangoing vessels.
Douglas County State Bank, chartered in 1945,
132
$34,454, 060
1,362,451,111
1, 393,401,225
To be operated
3
104
107
presently has a main office in Roseburg, Oreg., and
two branch offices nearby in Douglas County. As of
June 30, 1965, it had total assets of $31,490,000, IPC
deposits of $23,759,000, total deposits of $28,317,000,
and loans and discounts totaling $19,577,000.
Roseburg, Oreg., is the regional trading center for
the upper Umpqua River Valley, which comprises
most of Douglas County and lies in the southwestern
part of the State. Most of the county is mountainous,
forested land with the result that the primary source
of income in the Roseburg area is from lumber and
plywood manufacturing, including logging.
Within the upper Umpqua River Valley in Douglas
County, the trade area of the merging bank, there are
10 banking offices operated by 4 banks. In Roseburg,
there are four banking offices operated by three banks;
one each by the United States National Bank and the
merging bank, and two by the First National Bank
of Roseburg. The acquiring bank has no offices in
Douglas County, and its nearest offices are in Cottage
Grove (Lane County), Grants Pass (Josephine
County), and Coquille (Coos County), respectively
54, 74, and 74 miles from Roseburg.
The acquiring bank is not a competitive factor in
Douglas County by virtue of the mileage between its
offices and Roseburg and the fact that the vast, im-
penetrable, mountainous, forest lands surrounding
Roseburg preclude such. Consummation of the merger
will not, therefore, lessen competition in the Douglas
County market. Nor will entry of First National Bank
of Oregon into the Douglas County market by merger
with Douglas County State Bank eliminate any "potential" competition, inasmuch as the acquiring bank
could not otherwise effectively enter the Douglas
Count market due to the home office protection provided by State law. Furthermore, the merger itself
will raise no barriers to entry by other potential competitors.
Consummation of the merger will not increase banking concentration within the Douglas County market
Following the merger there will be the same number
of banking alternatives available in the market as
before, and the existing market shares of each will not
be increased by reason of the merger. It is concluded,
therefore, that the effect of the merger upon competition in the Douglas County market will not be adverse.
Although the relevant market here is clearly not
statewide, the proportion of total deposits statewide
held by First National Bank of Oregon has decreased
from 42 percent in 1954 to 39 percent in 1964, and
the proportion of total banking offices statewide held
by First National Bank of Oregon has declined from
37 percent in 1954 to 33 percent in 1964. Consummation of the merger will add to this share only 0.9
percent of total statewide deposits and 0.9 percent of
the total statewide banking offices. During the same
10-year period the share of total statewide deposits
held by banks other than the two largest banks in the
State has increased from 17 to 22 percent, and of the
total number of bank offices from 31 to 34 percent. It
appears, therefore, that during the last 10 years there
has been a statewide decrease in concentration.
Consummation of the merger will provide the merging bank with needed depth and continuity of management. Moreover, by virtue of the acquiring bank's
ability to provide skilled and diversified management
and accounting services and its ability to enter the
money market and secure operating capital at prices
lower than those which the smaller merging bank
would have to pay, the merger should produce economies of operation.
A survey of the lumbering industry in Douglas
County discloses a trend toward fewer sawmills and
bigger integrated facilities. Since 1951, the number
of active sawmills in Douglas County has decreased
from 160 to 38 in 1964. The changing characteristics
of the lumbering industry indicate that banks, such as
the acquiring bank, with larger lending limits than
those of the merging bank and with specialized knowledge will be best able to meet the financial needs of
the larger, integrated manufacturers, and will best be
able to adjust to the fluctuating economic conditions
in that industry. In addition, the resulting bank will
be better able to serve the convenience and needs of
the Douglas County market by bringing services there,
particularly specialized lending services, agricultural
representative services, trust department services, and
international banking services, which the merging
bank does not now offer.
Applying the statutory criteria to the proposed
merger, it is concluded to be in the public interest and
the application is, therefore, approved.
DECEMBER 22,
1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
The First National Bank of Oregon (National),
Portland, Oreg., proposes to merge with the Douglas
County Bank (Douglas), Roseburg, Oreg. It intends
to operate Douglas' main office and its branch offices
in Oakland and Sutherlin, Oreg., as branches of
National.
National is the largest of two statewide banking
chains, which together control about 78 percent of
all commercial banking in the State of Oregon. Both
statewide chains have obtained their present position,
in part, through mergers with and acquisitions of other
banks. National now proposes to add three additional
banking facilities to its chain of banking offices, thus
continuing the trend toward concentration of all banks
in Oregon in the hands of the two dominant banks.
Douglas competes in a limited manner with a branch
office of National and competes directly with branch
offices of United States National Bank of Oregon, the
other large banking chain in the State of Oregon.
The acquisition may further endanger the ability of
other smaller, independent banks in the Roseburg area
and throughout the State to compete effectively with
the two largest statewide banking chains. Douglas
with deposits of $28 million is the seventh largest
bank in the State of Oregon and the largest bank
outside of the Portland metropolitan area. Of the
53 banks in Oregon, 46 of them are smaller than
Douglas and each has less than 1 percent of total
deposits in that State.
Thus, it is believed that the proposed acquisition
will have a seriously adverse effect on competition and
will further the trend toward concentration of all commercial banking in the State of Oregon in the hands
of the two largest banking chains.
133
BANK OF LOS ANGELES, LOS ANGELES, CALIF., AND UNITED STATES NATIONAL BANK, SAN DIEGO, CALIF.
Name of bank and type of transaction
Total assets
Banking offices
In operation
Bank of Los Angeles, Los Angeles, Calif., with
and United States National Bank, San Diego, Calif. (10391), which had
merged Dec. 29, 1965, under charter and title of the latter bank (10391).
The merged bank at the date of merger had
COMPTROLLER'S DECISION
On November 22, 1965, United States National
Bank, San Diego, Calif., and Bank of Los Angeles,
Los Angeles, Calif., applied to the Office of the Comptroller of the Currency for permission to merge under
the charter and with the title of the latter.
San Diego, with a population of approximately
654,000, is a port city and is California's third largest
city. The economy of this area is highly diversified in
agriculture, manufacturing, foreign and domestic finance, and service industries. The employment rate
is rising and the area is growing in population by an
estimated 400,000 each year.
Los Angeles, with a population of 2,700,000 has
experienced a huge population growth during the past
25 years. The downtown financial district of Los
Angeles, where the merging bank is located, is the
financial and commercial headquarters for southern
California. While the charter bank has 10 branches
in the Los Angeles Metropolitan area, it does not have
any offices in this downtownfinancialdistrict.
The charter bank, with $208 million in IPC deposits, is the 10th largest bank in California. In addition to the main office, the bank at present operates
39 branches in 5 southern California counties. It competes with four of the five largest banks in the State,
as well as with several smaller banks.
The merging bank, with $11.3 million in IPC deposits, has one branch in operation and plans to open a
second branch on December 27. Twenty-three banks
operate 149 offices within a 5-mile radius of the Los
Angeles financial section, including branches of 4 of
the largest banks in the State. In addition, there are
28 savings and loan associations located in the same
area.
The proposed merger will have little effect on competition either in San Diego or in the four-county area
served by the charter bank. In the intensely competitive financial district of Los Angeles, the resulting bank
will be a stronger factor than the merging bank.
There will be no elimination of competition as the
134
$18, 572, 532
309,001,530
To be operated
3
42
327, 574,062
45
nearest office of the United States National Bank to
the head office of the Bank of Los Angeles is 8J/2 miles.
The effect on competition will be de minimis in the San
Diego area and positive in downtown Los Angeles.
The management of the charter bank is considered
very capable. With its considerable depth and high
caliber of management, the charter bank can supply
officers for the downtown Los Angeles branch which
the merging bank, because of its size, cannot attract.
The resulting bank will offer a greatly increased
lending limit to the customers of the merging bank.
In addition, trust services, which are not now offered
by the merging bank, will be available at the resulting
bank in Los Angeles.
The Bank of Los Angeles has not become the solid
force in the downtown Los Angeles banking community which was expected of it at its opening in
February 1963. The merger will greatly strengthen
this downtown banking office, and will offer even better banking services to an area which, because of the
progressive branching laws of California, enjoys banking services of the highest quality.
Having considered the merger application in the
light of the relevant statutory criteria, it is determined
that the merger will be in the public interest and it is,
therefore, approved.
DECEMBER 29, 1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
This application is a proposal by the charter bank,
a San Diego-based institution with 40 offices located
principally in the vicinity of San Diego or Los Angeles
and deposits of $267 million, to acquire by merger a
two-office bank serving the Pasadena area near Los
Angeles.
Although the charter bank operates several offices in
Los Angeles, the application reports no depositors or
borrowers common to the two banks with a single exception, and describes the business derived by each
bank in the service area of the other as negligible. It
states that the service areas of the merging banks are
contiguous rather than overlapping. These facts indicate that the banks are not in actual competition.
The proposed merger would not alter the rank of
the charter bank in its home office area, nor is it likely
to have a significant impact generally on competitors
of the charter bank in the Los Angeles area. Since the
merging bank's service area includes offices of California's largest banks, the proposed merger should not
substantially alter their competitive position.
For these reasons, it is our view that the proposed
merger would have no significant adverse effect on
competition.
THE FIRST NATIONAL BANK OF WHIPPANY, WHIPPANY, N.J., AND THE FIRST NATIONAL IRON BANK OF MORRISTOWN, MORRISTOWN, N.J.
Total assets
Name of bank and type of transaction
In operation To be operated
The First National Bank of Whippany, Whippany, N.J., Charter No. 13173, with..
and the First National Iron Bank of Morristown, Morristown, NJ. (1113),
which had
merged Dec. 30, 1965, under the charter of the latter bank (1113), and with
title of "The First National Iron Bank of New Jersey." The merged bank
at the date of the merger had
COMPTROLLER'S DECISION
On July 13, 1965, the First National Bank of
Whippany, Whippany, N.J., applied to the Office of
the Comptroller of the Currency for permission to
merge into the First National Iron Bank of Morristown, Morristown, N.J., under the charter of the latter
and with the title "The First National Iron Bank of
New Jersey."
Morristown, population 20,000, is the county seat
of Morris County, a prosperous residential and commercial area in northern New Jersey, approximately
30 miles from New York City. The population of
the county has increased from 164,000 in 1950 to an
estimated 328,000 in 1965. Industrial growth has
been equally impressive due to the location in the
county of many nationally and internationally known
companies.
Whippany is a section of Hanover Township, which
has a population of 10,200. Although it is largely
residential, the township, which is also in Morris
County, has a number of small industries as well as
some major companies, such as the Bell Telephone
Laboratories and International Paper Co. The economy is balanced and future prospects appear promising.
Morris County is served by 11 commercial banks
with 46 offices, and 1 savings bank with 2 offices.
The two largest of these banks are Morris County
Savings Bank, and the Trust Co. of Morris County,
both of which considerably exceed the size of the
$26, 715, 757
78,086, 256
104,820,014
12
charter or merging banks and will still be larger than
the resulting bank.
The effect of the merger on the competitive structure in Morris County will be minimal. It will permit
more vigorous competition with the two larger banks
in the county, which neither of the applicant banks
could offer alone. At the same time, it should not
disadvantage the several smaller banks which are operating quite successfully. The active competition
within the county is augmented by solicitation of
accounts there from banks in nearby Essex County in
particular. In addition, the New York City banks
are strong competitors for individual and corporate
accounts in the county, as many citizens commute to
New York to work and many of the companies have
head offices in New York. The strengthening of the
applicant banks through merger will thus offer greater
competition in Morris County.
The convenience and needs of the community will
be served by the merger. The increase in lending
limit resulting from the merger will permit the resulting bank to serve the larger industries which have
been moving into Morris County and which neither
bank has been able to serve alone.
The merging bank does not have trust powers.
After the merger, its customers will have the advantages of the long-established trust department of the
Iron Bank.
The banking public will also derive benefits from
the economies arising from centralized operations, such
135
as data processing, bookkeeping, business development,
and advertising. The management of the charter
bank has demonstrated progressive leadership as illustrated in the growth of deposits from $45 million
in 1960 to $59.1 million in 1964. The merging bank
has also benefited from sound leadership, but there is
not the depth of management there which gives confidence for the future. This merger is a salutary
solution to the Whippany Bank's management succession problem because it will enable utilization of the
charter bank's executive resources.
Applying the statutory criteria to the proposed
merger, we find that it is in the public interest and it
is, therefore, approved.
DECEMBER 17, 1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
First National Iron Bank ("Iron Bank") is presently
the second largest commercial bank in Morris County
with assets of approximately $65 million and nine
offices. First National Bank of Whippany ("First National") is the fifth largest commercial bank in competition with Iron Bank, and the sixth largest of all
such banks in the county, with assets of approximately
$22 million and three existing offices and another approved, but not yet open.
There is presently a degree of competition existing
between the merging bank, which should increase
when First National opens its approved branch in
Hanover, which is only 2.4 road miles from Iron Bank's
head office in Morristown. (Iron Bank has two other
offices in Morristown.) The proposed merger would,
of course, eliminate this competition.
In addition to Iron Bank, First National also competes with two offices of the Trust Go. of Morris County
("Trust Co.") and an office of the Boonton National
Bank. Trust Co. is the county's largest commercial
bank, with assets of approximately $91 million and ten
offices, two of which, including its head office, are in
Morristown. Boonton National Bank has three offices
and assets of approximately $20 million. The latter's
office which presently competes with First National's
head office appears close enough to Iron Bank's office
in Mountain Lakes to be in some competition with it.
As a result of this merger, this office of Boonton
National will be in competition with two offices of a
bank much larger than either of its present competitors.
This may affect Boonton National adversely should,
for instance, the office in Whippany have funds available for loan purposes from other offices of Iron
Bank. Since, however, only one of its three offices
will be involved, Boonton National may not be seriously
affected.
A more serious effect may be felt by Madison National Bank, which is a unit bank with assets of only
$4 million. Madison National already competes with
two offices of the Trust Co. and will probably be in
competition with First National's unopened branch in
Hanover. This merger would place Madison National
in competition with two, instead of one, comparative
giants.
The resulting bank will be approximately the same
size as the Trust Co. Together these banks would have
about 65 percent of the assets of commercial banks
competing with Iron Bank and 50 percent of the assets
of all commercial banks in the county. This degree
of concentration and dominance may limit the growth
of the county's smaller banks.
We conclude that approval of this merger may have
an adverse effect on existing and potential competition
and will increase concentration, which is already far
advanced, in the Morris County area.
METAMORA STATE SAVINGS BANK, METAMORA, MICH., AND THE FIRST NATIONAL BANK OF LAPEER, LAPEER,
MICH.
Banking offices
Name of bank and type of transaction
Total assets
In operation
Metamora State Savings Bank, Metamora, Michi, with
and the First National Bank of Lapeer, Lapeer, Mich. (1731), which
had
merged Dec. 31, 1965, under charter and title of the latter bank (1731). The
merged bank at the date of merger had
136
$5, 308, 982
2
21,913,315
4
27, 344, 851
To be operated
6
COMPTROLLER S DECISION
On October 22, 1965, the First National Bank of
Lapeer, Lapeer, Mich., and Metamora State Savings
Bank, Metamora, Mich., applied to the Office of the
Comptroller of the Currency for permission to merge
under the charter and title of the former.
Lapeer is located in eastern Michigan approximately
60 miles north of Detroit and 20 miles east of Flint. It
has a population of 6,000 and serves an area of about
42,000 persons. The economy of Lapeer is divided
between agriculture and industry, including the manufacture of mobile homes, airplane equipment, iron
castings, and products for the automobile industry.
The expansion of General Motor's plants in Flint has
also significantly contributed to the community's
economy.
Metamora, situated 9 miles south of Lapeer, has a
population of 450 and serves an area of 6,000 persons.
The town and its immediate vicinity have no industry
and are economically dependent upon the area's high
quality agriculture, especially dairy farming.
The charter bank, with IPC deposits of $17 million,
operates two drive-in facilities in Lapeer and one
branch office in Dryden, 4 miles northeast of the merging bank. Within the 9-mile service area of the
charter bank are 10 other banking institutions. Since
33 percent of the work force in Lapeer County is employed in Pontiac, Flint, and Saginaw, the acquiring
bank competes with large banks in those cities and
especially with the credit unions available to the automotive industry's employees in those cities.
The merging bank, with IPC deposits of $5 million,
has one branch office in Hadley, 6 miles northwest of
Metamora. Since 1957 a majority of the stock of the
merging bank has been held by a majority of the stockholders of the acquiring bank.
The charter bank has an aggressive and capable
management and has demonstrated a good growth
record during the last decade. The Metamora bank
faces a serious management succession problem, and
the community has need for broader banking services,
including the lease financing of agricultural equipment and machinery.
The merger will provide the Lapeer-Metamora area
with the facilities of a substantial bank and will increase competition with larger Pontiac, Flint, and
Saginaw based banks.
Although there is an overlap in the service areas of
the merging banks, the number of common depositors
is not significant and the competition is minimal because of the agricultural orientation of the merging
bank. Moreover, because of the present affiliation of
the two banks, their formal merger will result in a minimum of change in the competitive banking structure
of Lapeer County.
Applying the statutory criteria to the proposed
merger, we conclude that it is in the public interest
and it is, therefore, approved.
DECEMBER 13, 1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
This is the first merger by either bank. Both are
comparatively small country banks located in Lapeer
County, Mich. Although it would technically increase
banking concentration ratios beyond allowable limits
in what we consider to be the relevant market area
by combining National's 29.6 percent share with
Metamora's 6.69 percent, the fact that majority stock
control of both has rested in the same hands for about 9
years, renders the merger little more than a formality
with no significant competitive impact.
FIRST NATIONAL BANK OF BOONE, BOONE, N.C., AND FIRST NATIONAL BANK OF EASTERN NORTH CAROLINA,
JACKSONVILLE, N.C.
Banking offices
Name of bank and type of transaction
Total assets
In operation
First National Bank of Boone, Boone, N.C. (15116), with
and First National Bank of Eastern North Carolina, Jacksonville, N.C. (14676),
which had
merged Dec. 31, 1965, under charter and title of the latter bank (14676).
The merged bank at the date of merger had
To be operated
$2, 005, 600
38,255, 360
40,083,338
16
17
137
COMPTROLLER'S DECISION
On November 29, 1965, the First National Bank of
Boone, Boone, N.C., and the First National Bank of
Eastern North Carolina, Jacksonville, N.G., applied to
the Office of the Comptroller of the Currency for permission to merge under the charter and with the title
of the latter.
The charter bank, with IPC deposits of $25 million,
is located in Jacksonville, the county seat of Onslow
County and with a population of about 14,000. Jacksonville, situated in the eastern section of the State,
some 18 miles from the Atlantic Ocean, has experienced considerable growth in recent years. It is a
trade center for the agricultural products of the area.
The First National Bank of Eastern North Carolina,
through its 17 offices, operates principally in the eastern
section of the State in an area referred to as the
"Coastal Plains Area." The bank, since opening in
1952, has experienced rapid growth. Banking competition in this area is offered by offices of other large
banks. In addition, there are savings and loan associations, insurance companies, credit unions, sales finance
and personal loan companies, and direct lending
agencies of the Government.
The merging bank, with IPC deposits of $1.5 million, is located in Boone, the seat of Watauga County,
with a population of about 4,000. Boone, situated in
the Blue Ridge Mountains in the western part of the
State, is a retail trading center for an agricultural area,
a tourist attraction, and the site of the Appalachian
State Teachers College which has a student enrollment
of over 4,000. Future prospects for the area are good
by reason of increasing emphasis on winter sports and
industrial development. The First National Bank of
Boone is a small single-unit bank, presently faced with
a serious management problem. The bank faces competition from branch offices of the large Northwestern
Bank, one savings and loan association, and other
financial institutions.
The proposed merger will not result in the elimination of competition between the applicant banks. The
138
nearest office of the charter bank is 250 miles east oi
the merging bank and there is no evidence of existing
competition between them. While the addition of $2
million in assets to the charter bank will have practically no competitive effect in the Jacksonville area,
consummation of the proposed merger will solve a serious management problem at the merging bank, and
will provide a bank better able to meet the needs and
serve the interests of Boone by providing a broadei
based institution capable of meeting the general credit
demands of this community.
Applying the statutory criteria to the proposed
merger, we conclude that it is in the public interest and
the application is, therefore, approved.
DECEMBER 29,
1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
First National Bank of Boone, which was organized
on July 2, 1963, is a single office bank with total assets
of $1,950,872, total deposits of $1,633,362, net loans
and discounts of $1,152,000, and capital accounts oi
$277,971.
First National Bank of Eastern North Carolina,
which was organized on October 4, 1952, has followed
an aggressive policy of branching which had broughi
it into competition with the largest banks in the State
As of October 30, 1965, it had 18 offices with total assets of $35,517,837, total deposits of $30,715,484, nei
loans and discounts of $19,766,000, and total capita
accounts of $3,752,552.
The head offices of the merging banks are approximately 225 miles apart and the closest branch office
of the acquiring bank is over 100 miles from the acquired bank. There is little, if any, competition between the merging banks which would be eliminated
by the merger. Neither does it appear that there will
be any adverse competitive effect on other banks located in the service area of either of the merging banks
in the event of merger.
The competitive effect of the proposed merger would
not be adverse.
THE PEOPLES SAVINGS BANK OF GREENVILLE, OHIO, GREENVILLE, OHIO, AND THE SECOND NATIONAL BANK OF
GREENVILLE, GREENVILLE, OHIO
Name of bank and type of transaction
Total assets
Banking offices
In operation To be operated
The Peoples Savings Bank of Greenville, Ohio, Greenville, Ohio, with
and the Second National Bank of Greenville, Greenville, Ohio (2992), which
had
merged Dec. 31, 1965, under charter of the latter bank (2992) and under
title of "The Second National Bank of Greenville, Greenville, Ohio." The
merged bank at the date of merger had
COMPTROLLER'S DECISION
On October 15, 1965, the People's Savings Bank of
Greenville, Greenville, Ohio, and the Second National
Bank of Greenville, Greenville, Ohio, applied to the
Office of the Comptroller of the Currency for permission to merge under the charter and with the title
of the latter.
Greenville, population 13,750, is located in the
western central part of Ohio, being the only city and
principal commercial center of Darke County, population 47,000. The trade area of Greenville encompasses
the entire county. Agriculture, the primary economic
base of the area, contributed more than $26 million
income to the area in 1964. In addition, there is substantial industrial activity provided by plants of Fram
Corp., Corning Glass Works, the Hobart Manufacturing Co., Neff Athletic Lettering Co., General Athletic
Products Co., and American Aggregate Corp., among
others.
The $16 million charter bank operates its main office
and one branch in Greenville. It has experienced
steady growth in deposits and other resources largely
as a result of increased economic activity in Darke
County. The $4.5 million merging bank maintains its
main office in Greenville; its growth has been slow
due to conservative policies and management. Actual
competition between the two banks has been slight because of the limited resources of the merging bank.
Additional competition is provided by the nine other
banks and three building and loan associations vying
for business in the county.
Convenience and needs of the community will be
served by the merger because of additional services
$4, 530, 020
1
16,556,849
2
21, 086, 870
3
which the resulting bank can provide. The larger
lending capacity of the resulting bank arising from the
merger will put the banks in a better position to serve
the expanding financial requirements of the industrial
and agricultural complex of the rapidly growing
county. Management depth and an increased ability
to recruit and train competent personnel, which has
been a problem for the merging bank in the past, will
also be provided as a result of the merger.
Applying the statutory criteria to the proposed
merger, we conclude that it is in the public interest
and the application is, therefore, approved.
DECEMBER 16,1965.
SUMMARY OF REPORT BY ATTORNEY GENERAL
The Second National Bank of Greenville, Greenville, Ohio, with total assets of $16,299,000, and one
branch office, proposes to merge the Peoples Savings
Bank of Greenville, which has total assets of $4,445,000, and to operate the merged bank as a branch
office.
Applicant bank is first and merging bank is third in
rank among four banks in the city of Greenville. The
merging banks are located a block apart in a town
serving an area predominantly agricultural. Neither
of the participating banks has been involved in a
merger or acquisition during the past 5 years.
The proposed merger will eliminate all competition
between two of four competing banks in Greenville
and reduce the banking alternatives from four to
three. Applicant bank's dominant position in Greenville and Darke County will be materially enhanced
and the effect on competition will be adverse.
139
APPENDIX B
Statistical Tables
INDEX
Statistical Tables
Table No.
Title
Page
B-l Comptrollers of the Currency, 1863 to the present. 143
B-2 Administrative Assistants to the Comptroller of
the Currency and Deputy Comptrollers of the
Currency, by dates of appointment and resignation, and native States
144
B-3 Changes in the structure of the National Banking
System, by States, 1863-1965
145
B-4 Applications for new National bank charters, approved and rejected, by States, calendar 1965... 146
B-5 Newly organized National banks, by States, calendar 1965
148
B-6 State chartered banks converted to National banks,
calendar 1965
151
B—7 National banks reported in voluntary liquidation,
calendar 1965
151
B-8 National banks merged or consolidated with
State banks, calendar 1965
152
B-9 National banks converted into State banks, calendar 1965
153
B-10 Purchases of State banks by National banks, calendar 1965
153
B—11 Consolidations of National banks, or National
and State banks, calendar 1965
154
B—12 Mergers of National banks, or National and State
banks, calendar 1965
155
B-l 3 Domestic branches entering the National Banking
System, de novo opening, or by merger or conversion, by States, calendar 1965
161
B-l4 Domestic branches of National banks closed, by
States, calendar 1965
169
B-l5 Principal assets, liabilities, and capital accounts of
National banks, by deposit size, year end 1964
and 1965
171
B-l 6 Dates of reports of condition of National banks,
1914-66
172
142
Table No.
Title
Pagi
B-l 7 Total and principal assets of National banks, by
States, June 30, 1965
17'
B-l8 Total and principal liabilities of National banks,
by States, June 30, 1965
I7t
B-l 9 Capital accounts of National banks, by States,
June 30, 1965
17(
B-20 Total and principal assets of National banks, by
States, December 31, 1965
17]
B-21 Total and principal liabilities of National banks,
by States, December 31, 1965
17*
B-22 Capital accounts of National banks, by States,
December 31, 1965
17$
B-23 Loans and discounts of National banks, by States,
December 31, 1965
18(
B-24 Bank trust assets and income, by States, calendar
1965
18!
B-25 Common trust funds, by States, 1964 and 1965... 18i
B-26 Income and expenses of National banks, by States,
year ended December 31, 1965
18<
B-27 Income and expenses of National banks by deposit size, year ended December 31, 1965
19'
B-28 Capital accounts, net profits, and dividends of
National banks, 1944-65
19'
B-29 Loan losses and recoveries of National banks,
1945-65
19i
B-30 Securities losses and recoveries of National banks,
1945-65
19i
B—31 Foreign branches of National banks, by region and
country, December 31, 1965
191
B-32 Foreign branches of National banks, 1955-65
19!
B-33 Assets and liabilities of foreign branches of National banks, December 31, 1965: consolidated
statement
19'
B-34 Assets and liabilities of National banks, date of
last report of condition, 1936-65
191
TABLE
B-l
Comptrollers of the Currency, 1863 to the present
Date of
appointment
McCulloch, Hugh
Clarke, Freeman
Hulburd, Hiland R
Knox, John Jay
Cannon, Henry W
Trenholm, William L. . .
Lacey, Edward S
Hepburn, A. Barton....
Eckels, James H
Dawes, Charles G
Ridgely, William Barret.
Murray, Lawrence O. . .
Williams, John Skelton. .
Crissinger, D. R
Dawes, Henry M
Mclntosh, Joseph W
Pole, John W
O'Connor, J. F. T
Delano, Preston
Gidney, Ray M
Saxon, James J
Camp, William B
May
Mar.
Feb.
Apr.
May
Apr.
May
Aug.
Apr.
Jan.
Oct.
Apr.
Feb.
Mar.
May
Dec.
Nov.
May
Oct.
Apr.
Nov.
Nov.
9, 1863
21, 1865
1, 1867
25, 1872
12, 1884
20, 1886
1, 1889
2,1892
26, 1893
1, 1898
1, 1901
27, 1908
2, 1914
17, 1921
1, 1923
20, 1924
21, 1928
11, 1933
24, 1938
16, 1953
16, 1961
16,1966
Date of
resignation
Mar. 8, 1865
1866
July 24,
3, 1872
Apr. 30, 1884
Apr. 1, 1886
Mar.
1889
Apr. 30,
30, 1892
June 25,
Apr. 31, 1893
Dec. 30, 1897
1901
Sept. 28, 1908
Mar.
Apr. 27, 1913
Mar. 2, 1921
Apr. 30, 1923
Dec. 17, 1924
Nov. 20, 1928
Sept. 20, 1932
Apr. 16, 1938
Feb. 15, 1953
Nov. 15, 1961
Nov. 15, 1966
State
Indiana
New York
Ohio
Minnesota
Minnesota
South Carolina
Michigan
New York
Illinois
Illinois
Illinois
New York
Virginia
Ohio
Illinois
Illinois
Ohio
California
Massachusetts
Ohio
Illinois
Texas
143
TABLE B-2
Administrative Assistants to the Comptroller of the Currency and Deputy Comptrollers of the Currency, by the dates 0
appointment and resignation, and native States
No.
Date of
Date of
resignation
ADMINISTRATIVE ASSISTANTS TO THE COMPTROLLER
Larsen, Arnold E .
Faulstich, Albert J
Chase, Anthony G .
Dec. 24, 1961
July 2, 1962
July 21, 1965
July 1, 19621 Nebraska
July 18, 1965 Louisiana
Washington
May 9, 1863
Aug. 1, 1865
Mar. 12, 1867
Aug. 8, 1872
Jan. 5, 1886
Jan. 27, 1887
Aug. 11, 1890
Apr. 7, 1893
Mar. 12, 1896
Sept. 1,1898
June 29, 1899
July 1, 1908
May 21, 1923
July 1, 1923
Jan. 6, 1925
July 1, 1927
July 6, 1927
Dec. 1, 1928
Jan. 24, 1933
Feb. 24, 1936
Jan. 16, 1938
Jan. 16, 1938
Oct. 1, 1938
May 1, 1939
July 7, 1941
Sept. 1, 1941
Oct. 1, 1944
Jan. 1,. 1949
Sept. 1, 1950
Mar. 1, 1951
Feb. 18, 1952
Sept. 15, 1959
May 16, 1960
Apr. 2, 1962
Aug. 4, 1962
Sept. 3, 1962
Dec. 23, 1962
Jan. 1, 1963
July 13, 1964
Sept. 1, 1964
Sept. ,1964
July 19, 1965
July 1,1966
Aug. 1, 1865
Jan. 31, 1867
Apr. 24, 1872
Jan. 3, 1886
Jan. 3, 1887
May 25, 1890
Mar. 16, 1893
Mar. 11, 1896
Aug. 31, 1898
June 27, 18992
Mar. 2, 1923
Feb. 14, 1927
Dec. 19, 1924
June 30, 1927
Nov. 30, 1928
Feb. 15, 1936
Oct. 16, 1941
Jan. 23, 1933
Jan. 15, 1938
Jan. 15, 1938
Sept. 30, 1938
Sept. 30, 1938
Dec. 31,1948
Aug. 31, 1941
Mar. 1, 1951
Sept. 30, 1944
Feb. 17, 1952
Aug. 31, 1950
May 16, 1960
Apr. 1, 1962
Dec. 31, 1962
Aug. 31, 1962
Aug. 3, 1962
Nov. 15, 1966
Oct. 26, 1963
DEPUTY COMPTROLLERS OF THE CURRENCY
Howard, Samuel T .
Hulburd, Hiland R .
Knox, John Jay .
Langworthy, John S .
Snyder, V. P . . . .
Abrahams, J. D . . .
Nixon, R. M . . . .
Tucker, Oliver P . .
Coffin, George M . .
Murray, Lawrence O
Kane, Thomas P . .
Fowler, Willis J
. .
Mclntosh, Joseph W
Collins, Charles W .
Stearns, E. W . . .
Await, F. G . . . .
Gough, E. H . . . .
Proctor, John L . . .
Lyons, Gibbs . . . .
Prentiss, William, Jr .
Diggs, Marshall R .
Oppegard, G. J . . .
Upham, C. B .
Mulroney, A. J
McCandless, R. B
Sedlacek, L. H . . .
Robertson, J. L . .
Hudspeth,J. W . . .
Jennings, L. A . . .
Taylor, W. M . . .
Garwood, G. W . .
Fleming, Chapman C
Haggard, Hollis S . .
Camp, William B . .
Redman, Clarence B
Watson, Justin T . .
Miller, Dean E . . .
DeShazo, Thomas G .
Egertson, R. Coleman
Blanchard, Richard J
Park, Radcliffe . . .
Faulstich, Albert J . .
Motter, David C . .
1
Appointed
3
Died Mar.
3
New York
Ohio
Minnesota
New York
New York
Virginia
Indiana
Kentucky
South Carolina
New York
Dist. of Columbia
Indiana
Illinois
Illinois
Virginia
Maryland
Indiana
Washington
Georgia
California
Texas
California
Iowa
Iowa
Iowa
Nebraska
Nebraska
Texas
New York
Virginia
Colorado
Ohio
Missouri
Texas
Connecticut
Ohio
Iowa
Virginia
June 30, 19663 Iowa
Massachusetts
Wisconsin
Louisiana
Ohio
Regional Comptroller of the Currency with headquarters in San Francisco, Calif.
2, 1923.
Appointed Regional Comptroller of the Currency with headquarters in Philadelphia, Penn.
144
TABLE
B-3
Changes in the structure of the National Banking System, by States,
Consolidated and merged
Organized under 12 U.S.C. 215
and opened
. Insolfor busiventcies
ness 1863ConsoliMerged
1965
dated
United States
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
District of Columbia
Florida. .
M!aryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
.
Montana
Nebraska
.
Nevada
New Hampshire
New Mexico.
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania.
Rhode Island
243
2,817
6,705
64
243
4,815
4
2
0
45
0
62
2
0
6
21
0
0
0
0
0
1
0
0
14
0
13
8
0
0
86
5
4
65
95
117
29
5
8
195
0
0
2
1
4
1
0
2
0
1
57
2
9
417
122
101
170
81
47
21
7
10
3
0
0
1
0
0
1
0
50
93
97
193
37
96
50
126
3
51
16
0
68
8
0
5
0
2
59
0
147
34
198
30
42
224
222
12
373
4
0
0
2
1
2
6
5
0
0
0
0
0
0
25
33
76
545
13
27
118
31
79
110
39
1
0
1
19
0
21
39
66
55
384
84
69
18
2
0
0
0
0
6
0
56
7
1
8
2
0
0
7
42
13
41
199
7
8
1
0
0
42
0
112
965
444
561
454
0
19
14
4
6
1
3
1
0
0
35
227
98
205
76
87
4
65
296
205
243
198
0
2
0
7
4
250
120
11
4
2
0
37
16
110
53
7
0
8
5
13
79
0
156
382
348
510
93
3
38
11
8
5
10
6
3
0
1
17
28
77
116
16
69
207
157
192
34
0
0
0
1
0
319
205
411
17
12
3
2
1
58
76
83
4
148
76
199
8
3
0
1
0
0
5
11
0
36
280
1
0
0
0
0
0
5
0
83
3
1
5
23
435
49
13
59
150
1
37
440
58
118
333
454
102
0
4
0
0
1
2
0
488
58
2
0
49
0
81
94
572
19
29
74
137
2
2
16
1
1
0
0
97
o1
262
135
32
1 012
' 157
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia....
Wisconsin
Wyoming
Virgin Islands
Puerto Rico
In
operation
Merged or Dec. 31,
Converted to consolidated 1965
State banks with State
banks
683
127
. .
Liquidated
199
8
160
601
. .
12 U.S.C. 214
15, 570
32
Georgia
Hawaii...
Idaho
Illinois
Indiana
. ..
Iowa
Kansas.
Kentucky
Louisiana
Maine
1863-1965
263
715
775
151
1
123
8
3
32
12
2
0
49
9
0
8
0
2
55
0
25
130
44
100
112
85
31
132
8
7
211
2
43
222
218
45
85
276
242
13
8
45
4
3
21
18
0
0
0
0
2
30
5
93
36
142
6
17
28
51
196
288
11
9
0
0
77
1
1
0
0
0
0
0
0
38
54
1,286
67
1,321
98
3
12
0
0
68
115
0
0
26
0
1
0
0
0
145
TABLE
B-4
Applications for new National bank charters, approved and rejected, by States, calendar 1965
Alabama
Foley, Ala
Jasper, Ala
Approved Rejected
1965
1965
Apr. 1
May 13
Arkansas
Clinton, Ark
Feb. 24
Citizens National Bank of Jacksonville,
Jacksonville, Ark
Dec. 10
Little Rock, Ark
Dec. 10
Fidelity National Bank of West Memphis,
West Memphis, Ark
Dec. 10
Louisiana
Maryland
Ellicott City, Md
Feb. 24
Massachusetts
Congress National Bank of Boston, Boston,
Mass
Jan. 13
Lakeville, Mass
Feb. If
Lynn, Mass
Feb. U
Belmont, Mass
Nov. I
Connecticut
Jan.
Jan.
Jan.
Jan.
Feb.
Apr.
4
5
5
14
18
1
Florida
an. 4
an. 5
an. 5
an. 7
an. 14
Feb. 12
Feb. 12
Apr. 15
Apr. 16
Apr. 21
May 13
May 21
June 8
Aug. 20
Dec. 13
Dec. 13
Georgia
Lafayette, Ga
Apr. 1
Atlanta, Ga
July 27
Security National Bank, near Smyrna,
Ga
Dec. 20
Hawaii
Apr. 2'i
May 21
Minden, La
Apr. It
Port Allen, La
May 21
Parish National Bank of Bogalusa, Bogalusa, La
Nov. 1
Abbeville, La
Nov. I
Denver, Colo.
Lyons, Colo...
146
Mar. U
May 1(
May U
May 21
June 2c
June 2;
Dec. 2(
Apr. 21
Dec. 2c
Kansas
Lawrence, Kans
Wichita, Kans
Colorado
Honolulu, H waii
8
Dubuque, Iowa
Cedar Rapids, Iowa
Menlo Park, Calif
Santa Barbara, Calif
Los Angeles, Calif
Los Angeles, Calif
Watsonville, Calif
Lafayette, Calif
Lancaster, Calif
Santa Cruz, Calif
Camarillo, Calif
Santa Barbara, Calif
Baldwin Park, Calif
Modesto, Calif
Merced, Calif
Palm Desert, Calif
Alhambra, Calif
Seal Beach, Calif
Marysville, Calif
Anaheim, Calif
Los Angeles, Calif
Miami, Fla
Casselberry, Fla. . .
Moore Haven, Fla.
Miami Beach, Fla. .
Orlando, Fla
Fort Myers Beach, Fla.
Titusville, Fla
Auburndale, Fla
Daytona Beach, Fla
Miami, Fla
Fort Lauderdale, Fla
Orlando, Fla
Jacksonville, Fla
Islamorada, Fla
Ocala, Fla
Springfield, Fla
South Shores National Bank of Decatur,
Decatur, 111
Jan.
Urbana, 111
Chicago, 111
Mt. Vernon, 111
Hoffman Estates, 111
Addison, 111
Northbrook, 111
Charleston, 111
Iowa
California
Berlin, Conn
Branford, Conn
Branford, Conn
Hartford Conn
Groton, Conn
Norwich, Conn
Approved Rejected
1965
1965
Illinois
Feb. 26
Michigan
Warren, Mich
Warren, Mich
Oakland National
Mich
Bank,
Southfield,
Apr. 2f
Apr. 2i
May 10
Mississippi
Ocean Springs, Miss
Marks, Miss
Southern National Bank of Hattiesburg,
Hattiesburg, Miss
May 28
New Albany, Miss
Gulfport, Miss
First National Bank of Waynesboro,
Waynesboro, Miss
Nov. 2
Apr. 2i
May IS
June I
July '
Missouri
First National Bank of Richmond, Richmond, Mo
Jan. 5
Festus, Mo
Jan. 25
Joplin, Mo
Apr. ]
Kansas City, Mo
Apr. ]
Peoples National Bank of Joplin, Joplin,
Mo
Apr. 30
Richmond Heights, Mo
May 2<
Montana
East Helena, Mont
Ennis, Mont
Billings Heights, Mont.
Apr. :
Apr. i
Apr. 3(
TABLE B-4—Continued
Applications for new National bank charters, approved and rejected, by States, calendar 1965
Nebraska
Approved Rejected
1965
Western National Bank of Scottsbluff,
Scottsbluff, Nebr
Apr. 20
Nevada
Las Vegas, Nevada
Apr. 1
New Hampshire
New Jersey
Apr. 1
Apr. 27
* ' 21
2
New Mexico
Bernalillo County, N. Mex
Las Cruces, N. Mex
Johnson City, Tenn
Sweetwater, Tenn
Jefferson City, Tenn
First National Bank of Livingston, Livingston, Tenn
May. 28
Woodbury, Tenn
First National Bank of Selmer, Selmer,
Tenn
Sept. 8
Apr. 16
Apr. 28
Bank of Galveston, National Association,
Galveston, Tex
Capital National Bank, Houston, Tex
The Lumbermen's National Bank of
Houston, Houston, Tex
Houston, Tex.
Tomball, Tex
Whitehouse, Tex
First National Bank of Whitehouse, Whitehouse, Tex
Fort Hood National Bank, Fort Hood,
Tex
New York
Ohio
Community National Bank of Warrensville Heights, Warrensville Heights, Ohio Jan. 5
Avon Lake, Ohio
Feb. 24
North Olmsted, Ohio
May 21
Cleveland, Ohio
July 21
Cleveland, Ohio
July 21
Feb. 19
Feb. 26
Apr. 20
May 18
Oct. 18
Apr. 1
Virginia
Williamsburg National Bank, Wilhamsburg, Va
May 13
Alderwood Manor, Wash..
Longview, Wash
Port Angeles, Wash
Seattle, Wash
Fircrest, Wash
Apr.
June
June
July
Aug.
15
23
23
1
18
West Virginia
Cross Lanes, W. Va
May 13
The Valley National Bank of Huntington,
Huntington, W. Va
Oct. 11
Oklahoma
Wisconsin
Feb. 18
Apr. 1
June 23
Neenah West National Bank, Neenah,Wis.. Aug. 20
Security National Bank of Racine, Racine,
Wis
Sept. 24
Plover, Wis
Nov. 5
Wyoming
Crater National Bank of Medford, Medford, Oreg
Sept. 17
Jackson, Wyo. .
Cheyenne, Wyo
Cheyenne, Wyo
South Carolina
Feb. 19
Washington
Dec. 7
Timmonsville, S.C
Georgetown, S.C
May 28
Feb. 16
Feb. 19
American Fork, Utah
North Carolina
Oklahoma City, Okla
Oklahoma City, Okla
Miami, Okla
Jan. 4
Apr. 1
May 28
Utah
Staten Island, N.Y
Feb. 12
Wappingers Falls, N.Y
Apr. 15
Hicksville, N.Y
May 28
Community National Bank & Trust Co.
of Richmond, Staten Island, N.Y
Tune 10
Havelock, N.C
Approved Rejected
1965
1965
Texas
Peoples National Bank of Littleton,
Littleton, N.H
Sept. 24
Union, N J
neck, N
J.
Teaneck,
N,*
Den'iville, N J .
Ramsey,
nsey, N J . .
Tennessee
Apr.
June
Jan. 29
Apr. 1
Apr. 1
Puerto Rico
Hato Rey, Puerto Rico... ,
Jan. 29
147
TABLE
B-5
Newly organized National banks^ by States, calendar 1965
Charter
No.
Title and location of bank
Total, United States: 78 banks
Total capital
accounts
$74, 266,251
ALABAMA
15535
15473
15481
15485
15536
15466
400, 001
2,000, 001
1, 000, 00!
500, 001
500,001
400, 00<
First National Bank of Aliceville
City National Bank of Birmingham
City National Bank of Gadsden
Muscle Shoals National Bank, Muscle Shoals
Citizens National Bank of Opp
City National Bank of RussellviUe
4, 800, 001
Total: 6 banks
ARKANSAS
15482
500,001
Pine Bluff National Bank, Pine Bluff
CALIFORNIA
15484
15525
15506
15557
15515
15478
15495
15547
15532
15489
15488
Bellflower National Bank, Bellflower
Casitas National Bank, Carpinteria
Pan American National Bank of East Los Angeles
Imperial Valley National Bank, El Centro
University National Bank, Fullerton
Mechanics National Bank, Huntington Park
Lodi National Bank, Lodi
Santa Clarita National Bank, Newhall
Commercial and Farmers National Bank, Oxnard
Riverside National Bank, Riverside
Southland National Bank, Yucaipa
1, 250, 00<
800, 001
1, 000, 001
1, 000, 0(X
1, 200,001
1, 500, 001
1, 200, 001
1, 000, 001
1, 500, OCX
1, 000, 00(
1, 500, 00(
12,950,001
Total: 11 banks
COLORADO
15480
15472
15486
600,00
256, 25
510,00
Republic National Bank of Englewood
First National Bank of Estes Park
Midtown National Bank, Pueblo
1, 366, 25(
Total: 3 banks
CONNECTICUT
15496
15542
15549
The Hamden National Bank, Hamden
The Constitution National Bank, Hartford
Citizens National Bank of Southington
3, 500, 00(
Total: 3 banks
FLORIDA
15554
15475
15555
15465
15469
15474
15533
University National Bank of Boca Raton
City National Bank of Cocoa
Republic National Bank of Miami
The Second National Bank of North Miami
First National Bank of Princeton-Naranja
InterAmerican National Bank at Sunny Isles
National Bank of West Melbourne
GEORGIA
The First National Bank of Tucker
ILLINOIS
15553
15502
15520
15511
15545
South Shores National Bank of Decatur
The First National Bank of Lake Bluff
Mid-West National Bank of Lake Forest
Pekin National Bank, Pekin
North Towne National Bank of Rockford
Total: 5 banks
148
500, 00
500,00
625, 00
600,00
300,00
700,00
300,00
3, 525, 00i
Total: 7 banks
15531
1, 500, 00(
1, 500, 00(
500, 00(
500, 00'
400, 00
250, 00
500,00
550, 00
400,00
2, 100, 00
TABLE B-5—Continued
Newly organized National banks, by States, calendar 1965
Title and location of bank
Charter
No.
15467
First National Bank of Hartford City.
15503
City National Bank of Pittsburg
15497
The Old Line National Bank, Rockville.
Total capital
accounts
MARYLAND
3, 000, 000
MASSACHUSETTS
15509
15483
Congress National Bank of Boston.
Harbor National Bank of Boston, .
280, 000
2, 000, 000
2,280, 000
Total: 2 banks
15559
15539
Oakland National Bank, Southfield.
1, 000, 000
First National Bank of Greenwood
Southern National Bank of Hattiesburg.
550, 000
1, 000, 000
Total: 2 banks.
15471
15522
15521
15494
1, 550, 000
First National Bank of Maiden
First National Bank of Richmond
Gateway National Bank of St. Louis
West Side National Bank, Warson Woods.
300,000
555, 000
500, 000
500, 000
1,855,000
Total: 4 banks
15551
Western National Bank of Scottsbluff.
300, 000
NEW JERSEY
15498
15534
15505
Englewood National Bank & Trust Co., Englewood
First National Bank of Moorestown
Security National Bank, Newark
2, 000, 000
625, 000
3, 000, 000
Total: 3 banks.
15499
Fidelity National Bank, Albuquerque.
5, 625, 000
NEW MEXICO
500, 000
NEW YORK
15558
15556
Community National Bank & Trust Co. of Richmond.
First National Bank of Rochester
3, 000, 000
2, 500, 000
5, 500, 000
Total: 2 banks.
15512
15543
15470
15561
500, 000
300, 000
1,000,000
1,000,000
National Bank of Defiance
Minerva National Bank, Minerva
Progress National Bank of Toledo
Community National Bank of Warrensville Heights.
Total: 4 banks.
15491
Great Western National Bank, Portland.
2, 800, 000
.j
3, 000, 000
j
15550
First National Bank of Livingston.
.|
400, 000
149
TABLE B-5—Continued
Newly organized National banks, by States, calendar 1965
Title and location of bank
Charter
No.
Total capital
accounts
TEXAS
15513
15529
15501
15528
15468
15523
15514
15544
National Bank of Commerce of Brownsville
Northpark National Bank of Dallas
Texas National Bank of Dallas
Capital National Bank, Houston
Bayshore National Bank of LaPorte
Richardson Heights National Bank, Richardson
Northeast National Bank, San Antonio
First National Bank of Whitehouse
Total: 8 banks
$500, 0(
1, 000,0(
765, (X
4, 500, 0(
500, 0(
600, 0(
500,0(
400,0(
8, 765,0(
UTAH
15490
625, 0(
Citizens National Bank, Ogden
VIRGINIA
15530
15562
Metropolitan National Bank, Richmond
Williamsburg National Bank, Williamsburg.
2, 000,0(
750,0(
Total: 2 banks
2, 750,0(
WASHINGTON
15493
15517
15538
Kennewick National Bank, Kennewick
Highland National Bank of Renton
Bank of Vancouver, National Association, Vancouver...
Total: 3 banks
350,0(
400, (X
500,0(
1,250,0(
WISCONSIN
15510
2, 500, 0(
Midland National Bank, Milwaukee
WYOMING
15500
First National Bank at Douglas
150
300,0(
TABLE
B-6
State chartered banks converted to National banks, calendar 1965
Charter
No.
Title and location of bank
State
Effective
date of
charter
1965
Outstanding
capital
stock
*$532,032,437
Total: 25 banks.
Central Bank, National Association, Tacoma.
15476 First National Bank of Oak Lawn
15479 First Citizens National Bank, Tupelo
15487 Home National Bank of Derby
15492 Southwest Virginia National Bank, Pocahontas.
15504 First National Bank of Crossett
15507 Union Trust National Bank of St. Petersburg.
15508 Commercial National Bank of L'Anse
10408 First National Bank, Ames
15516 Citizens National Bank, Florence
15518 Broadway National Bank & Trust Co. of
Pitman.
15519 First National Bank, New Albany
15524 First National Bank of Eldora
15526 The Adelphi National Bank, Adelphi
15537 Valley National Bank of Sioux Falls
15540 Daly National Bank of Anaconda
15541 The National Bank of Georgia, Atlanta
15546 First National Bank & Trust Co., Vidalia..
2370 The Chase Manhattan Bank (National
Association), N.Y.
15548 Deposit Guaranty National Bank, Jackson.
15552 Citizens National Bank of Belzoni
15560 County National Bank, Blackville
15563 The Indian Head National Bank of Manchester.
15564 Billings State Bank, National Association,
Billings.
15565 First National Bank in Wheatland
15477
Surplus,
Total assets
profits, and
$652,890, 931 $12,866,872,518
Wash..
Jan. 29
225, 000
339, 015
6,605,118
Ill
Miss...
Conn..
Va
Jan.
Feb.
Feb.
Mar.
30
6
26
9
300,000
280,000
50, 000
150,000
271, 722
636, 457
349, 005
237, 090
5, 903, 673
12, 998, 299
1, 177,989
4,479, 859
Ark.
Fla..
Apr. 24
Apr. 29
400, 000
2, 290, 550
Mich. .
Iowa...
Miss...
N.J....
Apr.
Apr.
May
May
565, 862
2, 797,480
483, 803
1,184,419
127, 348
301, 396
Miss...
Iowa...
Ohio...
S. Dak.
Mont. .
Ga
Ga
N.Y...
June 5
June 22
June 30
Aug. 9
Aug. 31
Sept. 1
Sept. 14
Sept. 23
Miss....
Miss
S.C
Oct.
Nov.
Nov.
Dec.
N.H....
Mont...
Wyo....
30
30
13
28
150, 000
400, 000
101,250
150, 000
6,099,153
16, 026, 747
1, 897, 510
6, 097, 878
125, 000
7,314,130
473, 612
1,417,932
125, 266
100, 000
1, 875, 003
131, 728
70, 000
501, 734
200, 000
12, 029,130
516, 776
300, 000
11,376,374
1, 700, 000
79,919,653
3, 967, 663
477, 151
100, 000
6, 396, 097
t511,891,637 622,197,905 12,229,809,375
8
1
22
15
$12,000,000
144, 000
300,000
225, 000
Dec. 16
300, 000
Dec. 31
80, 000
•Includes $255,000,000 of debentures.
•(•Includes $250,000,000 of debentures.
11,990,821
131,902,074
15, 255, 660
619, 805
240, 000
78,149
470, 812
541, 073
279, 126, 332
7, 678, 238
3, 225, 190
1,062,462
13, 372, 375
7, 091, 106
^Includes $5,000,000 of debentures.
TABLE
B-7
National banks reported in voluntary liquidation, calendar 1965
Title and location of bank
Date of
Total capital
liquidation accounts of
liquidated bank
Total: 4 banks.
Orange Empire National Bank, Anaheim, Calif. (15361), absorbed by United States National Bank,
San Diego, Calif
Apr. 12
Central Bank National Association, Tacoma, Wash. (15477), absorbed by Peoples National Bank of
Washington, Seattle, Wash
July 28
Water Street National Bank (formerly Grace National Bank of New York), New York, N.Y. (12553),
absorbed by the Marine Midland Grace Trust Co. of New York, New York, N.Y
Aug. 18
The Union City National Bank, Union City, Mich. (1826), absorbed by The Southern Michigan National
Bank of Coldwater, Coldwater, Mich
Aug. 31
$27, 276, 743
1,831,435
544, 948
24,615,769
284, 591
151
TABLE
B-8
National banks merged or consolidated with State banks, calendar 1965
Effective
date,
1965
Title and location of bank
$18,834,07
Total: 18 banks.
The Girard Battles National Bank, Girard, Pa.* (14191), merged with and into Security-Peoples Trust
Co., Erie, Penn
The First National Bank of Galeton, Galeton, Pa. (7280), merged with and into Tioga County Savings
& Trust Co., Wellsboro, Pa., and under the title "Commonwealth Bank and Trust Company."
The First National Bank of Lawrenceville, Lawrenceville, Pa. (9702), merged with and into Tioga County
Savings & Trust Co., Wellsboro, Pa., and under the title "Commonwealth Bank and Trust Company.".
Farmers & Traders National Bank of Westfield, Westfield, Pa. (9531), merged with and into Tioga
County Savings & Trust Co., Wellsboro, Pa., and under the title "Commonwealth Bank and Trust
Co."
The First National Bank of Marlboro, Marlboro, N.Y. (8834), merged with and into Kingston Trust
Co., Kingston, N.Y
The National Bank of Windham, Windham, N.Y.f (13962), merged with and into First Trust Co. of
Albany, Albany, N.Y
Guardian National Bank of Fairfax County, Springfield, Va. (15293), merged with and into the Bank of
Prince William, Woodbridge, Va
The First National Bank in Owenton, Owenton, Ky. (14026), merged with and into Farmers Bank,
Owenton, Ky., Inc., Owenton, Ky. and under the title "First Farmers Bank and Trust Co."
The Johnson County National Bank of Franklin, Franklin, Ind. (14075), merged with and into Farmers
Trust Co., Franklin, Ind
The First National Bank of Centerville, Centerville, Iowa (337), merged with and into Iowa Trust &
Savings Bank, Centerville, Iowa
The First National Bank of North Baltimore, North Baltimore, Ohio (4347), merged with and into the
Bank of Wood County Co., Bowling Green, Ohio
The First National Bank of Brownstown, Brownstown, Ind. (9143), consolidated with Brownstown Loan
& Trust Co., Brownstown, Ind., and under the title "The Peoples Bank."
First National Bank of Webster, Webster, Mass.* (13411), consolidated with the Guaranty Bank & Trust
Co., Worcester, Mass
Republic National Bank of San Diego, San Diego, Calif. (15366), merged with and into Union Bank,
Los Angeles, Calif
Lafayette National Bank of Brooklyn in New York, Brooklyn, N.Y.J (12892), merged with and into
Kings County Trust Co., Brooklyn, N.Y. and under the title "Kings County Lafayette Trust Co."..
The First National Bank of Fortville, Fortville, Ind. (9299), merged with and into Greenfield Banking
Co., Greenfield, Ind
The First National Bank of Coaldale, Pa. (9739), merged with and into American Bank & Trust Co. of
Pa., Reading, Pa
The Union National Bank of Rockwood, Rockwood, Pa. (14067), merged with and into Keystone Bank,
Freeport, Pa
*With 2 outside branches.
fWith 1 outside branch.
152
Total capital accounts
of National
banks
jWith 6 inside branches.
Mar. 1
671,41
Mar. 23
354,18
Mar. 23
241, 38
Mar. 23
352, 09
Mar. 31
373, 25
Apr. 30
398, 35
May 15
648, 55
June 29
120, 41
June 30
438, 13
June 30
363, 98
June 30
646, 92
Sept. 30
366, 56
Sept. 30
1,816,15
Nov. 12
2,993,69
Nov. 30
8, 001,45
Dec. 14
477, 27
Dec. 31
330, 81
Dec. 31
239,42
TABLE
B-9
National banks converted into State banks, calendar 1965
Total capital accounts
of National
banks
Title and location of bank
$9, 984, 087
Total: 8 banks.
The First National Bank of Binger, Okla. (12133), converted into Binger Community Bank
Mercantile-Commerce National Bank in St. Louis, Mo. (4178), converted into Mercantile-Commerce
Trust Co.
DeKalb National Bank of Brookhaven, Ga. (14620), converted into Trust Co. of Georgia Bank of DeKalb.,
First National Bank in Bellevue, Iowa (14158), converted into Bellevue State Bank
First National Bank of Bovina, Tex. (14755), converted into First State Bank of Bovina
Memorial National Bank of Houston, Tex. (15231), converted into Memorial Bank, Houston
,
The First National Bank & Trust Co. of Lake Norden, S. Dak. (13221), converted into First State Bank.,
National Bank of Hyde Park in Chicago, 111. (14386), converted into Hyde Park Bank & Trust Co.,
Chicago
TABLE
Feb. 6
164, 997
Mar. 10
Apr. 14
May 29
July 6
July 14
Sept. 30
5, 038, 099
752,416
424,339
235, 948
528, 910
168, 547
Dec. 31
2,670,831
B-10
Purchases of State banks by National banks, calendar 1965
Title and location of bank
Total: 9 banks.
Seattle-First National Bank, Seattle, Wash. (11280), purchased the Citizens State Bank, Arlington, Wash..
The First National Bank of Itasca, Itasca, Tex. (4461), purchased the First State Bank of Covington,
Covington, Tex
Stock Yards National Bank of South Omaha, Omaha, Nebr. (9908), purchased the South Omaha Bank,
Omaha, Nebr
Miners National Bank of Wilkes-Barre, Wilkes-Barre, Pa. (13852), purchased Forty Fort State Bank,
Forty Fort, Pa
The First National Bank & Trust Co. of Kalamazoo, Kalamazoo, Mich. (191), purchased Martin State
Bank, Martin, Mich
The American National Bank & Trust Co. of Kalamazoo, Kalamazoo, Mich. (13820), purchased the
Home State Bank of Lawrence, Lawrence, Mich
The Fairfield National Bank of Lancaster, Lancaster, Ohio (7517), purchased the Bank of Basil Co.,
Baltimore, Ohio
Western Pennsylvania National Bank, Pittsburgh, Pa. (2222), purchased the Avalon Bank, Avalon, Pa
National City Bank in Chicago, Chicago, 111. (14562), purchased the Century Bank of Chicago, Chicago,
Total capital accounts
of National
banks
$5,238, 180
660, 480
130,693
699, 187
930, 816
274, 373
263, 849
103, 709
1, 162, 529
1,012,544
226-601—67-
153
TABLE
B-ll
Consolidations of National banks, or National and State banks, calendar 1965
Title and location of bank
Total: 5 consolidations (after consummation).
The First National Bank of Milton, Milton, N.Y. (11649),
with
and the First National Bank of Highland, Highland,
N.Y. (5336), which had
consolidated Feb. 11, 1965, under charter and title of
the latter bank (5336). The consolidated bank at the
date of consolidation had
The National Shawmut Bank of Boston, Boston, Mass.
(5155), with
and Congress National Bank of Boston, Boston, Mass.
(15509), which had
consolidated May 6, 1965, under charter of the latter
bank (15509) and under title "The National Shawmut
Bank of Boston." The consolidated bank at date of
consolidation had
The Bath National Bank, Bath, Maine* (494), with
and Canal National Bank, Portland, Maine (941),
which had
consolidated May 14, 1965, under charter and title of
the latter bank (941). The consolidated bank at the
date of consolidation had
The First National Bank of Highland Park, Highland
Park,t NJ. (12598), with
and First Bank & Trust Co., National Association,
Fords, NJ. (15255), which had
consolidated June 25, 1965, under charter and title of
the latter bank (15255). The consolidated bank at
the date of consolidation had
,
Cambria County National Bank, Carrolltown, Carrolltown, f
Pa. (5855), with
and United States National Bank in Johnstown, Johnstown, Pa. (13781), which had
consolidated Dec. 11, 1965, under charter and title of
the latter bank (13781). The consolidated bank at
the date of consolidation had
*With 1 outside branch.
154
Outstanding
capital stock
Surplus
$18,487,460
$44, 328,400
Undivided profits
and reserves
$9, 596, 580
Total assets
$896, 389, 372
62,400
62,400
15, 789
1, 998, 282
250, 000
250, 000
141, 103
12,195,482
274, 960
412,400
194,332
14,193,764
10, 000, 000
35, 000, 000
5, 841, 897
606, 275, 320
200, 000
40, 000
38, 440
315, 394
10, 000, 000
168, 000
35, 000, 000
245, 000
6, 120, 392
155,003
606,381,496
6, 176,258
4, 200, 000
1,200,000
691,088
62, 780, 659
4, 700, 000
1, 300, 000
659, 090
68, 865, 785
690,000
700,000
487,191
22,646,413
1,425,000
2, 325, 000
450,717
85,454, 570
2,134, 500
3,094, 000
857, 908
108,108, 070
375,000
525, 000
210, 372
16, 939, 534
1,078,000
3, 922,000
1,554,485
83, 875, 784
1,378,000
4, 522, 000
1,764,858
98, 840, 257
fWith 2 outside branches.
TABLE
B-12
Mergers of National banks, or National and State banks, calendar 1965
Title and location of bank
Total: 59 mergers (after consummation)
The First National Exchange Bank of Clayton, Clayton,
N.Y. (5108), with
and the National Bank of Northern New York, Watertown, N.Y. (2657), which had
merged Jan. 15, 1965, under charter and title of the latter
bank (2657). The merged bank at the date of merger
had
'.'.
The Fort Mclntosh National Bank of Beaver, Beaver, Pa.
(8185), with
'
and Western Pennsylvania National Bank, McKeesport,
Pa. (2222), which had
merged Jan. 15, 1965, under charter and title of the latter
bank (2222). The merged bank at the date of merger
had
The First National Bank & Trust Co. of Ramsey, Ramsey,
NJ.i (9367), with
and Citizens First National Bank of Ridgewood, Ridgewood, N.J. (11759), which had
merged Jan. 29, 1965, under charter and title of the latter
bank (11759). The merged bank at the date of merger
had
The Bank of Glade Spring, Glade Spring, Va., with
and Virginia National Bank, Norfolk, Va. (9885), which
had
merged Jan. 29, 1965, under charter and title of the
latter bank (9885). The merged bank at the date
of merger had
First State Bank of Hoagland, Hoagland, Ind., with
and Lincoln National Bank & Trust Co. of Fort Wayne,
Fort Wayne, Ind. (7725), which had
merged Jan. 30, 1965, under the charter and title of the
latter bank (7725). The merged bank at the date of
merger had
The Hop Bottom National Bank, Hop Bottom, Pa. (9647),
with
and the First National Bank of Hallstead, Hallstead,
Pa. (7702), which had
merged Feb. 19, 1965, under charter of the latter bank
(7702) and under title of "Peoples National Bank of
Susquehanna County." The merged bank at the date
of merger had
The Farmers' National Bank of McAlisterville, McAlisterville, Pa. (9526), with
The First National Bank of Port Royal, Port Royal, Pa.
(11369), with
The Port Royal National Bank, Port Royal, Pa. (11373),
with
and the Juniata Valley National Bank, Mifflintown, Pa.
(5147), which had
merged Feb. 20, 1965, under charter and title of the
latter bank (5147). The merged bank at the date of
merger had
First National Bank of South Gate, South Gate, Calif.
(14899), with
and City National Bank, Beverly Hills, Calif. (14695),
which had
merged Feb. 26, 1965, under charter and title of the
latter bank (14695). The merged bank at the date of
merger had
The Birmingham National Bank, Derby, Conn. (1098),
with
and Home National Bank of Derby, Derby, Conn.
(15487), with
and the Second National Bank of New Haven, New
Haven, Conn. (227), which had
merged Feb. 26, 1965, under charter and title of the
latter bank (227). The merged bank at the date of
merger had
gee footnotes at end of table.
Outstanding
capital stock
Surplus
$336, 736, 221 $601, 723, 598
Undivided profits
and reserves
Total assets
$183,938,568
$16,201,819,818
100, 000
200, 000
212, 607
4, 502,422
1,571,840
1,571,840
1,194,855
54, 740, 086
1, 751, 840
1,751,840,
1,347,462
59, 242, 508
100,000
200, 000
189, 141
4, 537, 524
9, 132,910
16, 967, 090
3, 949, 307
566,018,962
9, 304, 910
17, 167,090
4, 066, 448
570, 556,486
250, 000
500, 000
538,479
13, 770, 090
1, 284, 000
1, 782, 000
1, 795, 632
79, 141, 622
1, 809, 000
125, 000
2, 300, 000
125,000
2,041,110
70, 836
92,911,712
3, 191, 703
8, 198, 825
21,801, 175
5, 250, 976
426,563,436
8, 273, 825
50, 000
21,976, 175
75, 000
5,321,813
68, 058
429, 176,324
2, 545,055
5, 000, 000
8, 000, 000
2, 363, 826
177,638,717
5,060,000
8,000,000
2,496, 884
179,823,846
50, 000
150, 000
100, 548
3, 408,695
100, 000
200, 000
252, 405
4,413,539
150, 000
450, 000
252, 952
7, 822, 235
50, 000
250, 000
75, 773
3, 592,190
60, 000
140, 000
51,671
2, 532,447
60, 000
170,000
109, 865
3,114,601
200, 000
600, 000
451,173
7, 708, 541
377, 000
1, 153,000
688,484
16, 947, 780
500, 000
200, 000
67, 880
7, 640,489
7, 243, 930
11,873,005
2, 318, 721
256,001,666
7, 496, 430
12, 320, 505
2, 379,026
263, 642, 155
300, 000
700, 000
439, 076
12,532,454
50, 000
275, 000
74, 005
1,177,988
3, 372, 162
4, 685, 875
1, 120, 842
125, 137,718
3,972, 162
5, 660, 875
1,400,672
138,844,607
155
TABLE B-12—Continued
Mergers of National banks, or National and State banks, calendar 1965
Title and location of bank
The Hollister National Bank, HolHster, Calif. (13510), with..
and the Bank of California, National Association, San
Francisco, Calif. (9655), which had
merged Mar. 12, 1965, under charter and title of the
latter bank (9655). The merged bank at the date of
merger had
The Peoples National Bank of Lexington, Lexington, Va.2
(7173), with
and the First National Exchange Bank of Virginia,
Roanoke, Va. (2737), which had
merged Mar. 17, 1965, under charter and title of the
latter bank (2737). The merged bank at the date of
merger had
Tryon Bank & Trust Co., Tryon, N.C.,1 with
and North Carolina National Bank, Charlotte, N.C.
(13761) which had
merged Mar. 22, 1965, under the charter and title of the
latter bank (13761). The merged bank at the date of
merger had
The Live Stock National Bank of Chicago, Chicago, 111.
(13674), with
and Central National Bank in Chicago, Chicago, 111.
(14362), which had
merged Mar. 26, 1965, under the charter and title of the
latter bank (14362). The merged bank at the date of
merger had
The Central Bank of Howard County, Clarksville, Md.,1
with
1
and the Citizens National Bank of Laurel, Laurel, Md.
(4364), which had
merged Mar. 31, 1965, under the charter of the latter
bank (4364) and under title "The Citizens National
Bank." The merged bank at the date of merger had..
Guaranty Bank, Torrance, Calif., with
and City National Bank, Beverly Hills, Calif. (14695),
which had
merged Apr. 2, 1965, under charter and title of the
latter bank (14695). The merged bank at the date of
merger had
The Farmers Bank & Trust Co., Rockingham, N.C.,1 with..
and Southern National Bank of North Carolina, Lumberton, N.C. (10610), which had
merged Apr. 3, 1965, under charter and title of the
latter bank (10610). The merged bank at the date of
merger had
The Leonia Bank & Trust Co., Leonia, N.J., with
and Citizens National Bank of Englewood, Englewood,
N J . (4365), which had
merged Apr. 9, 1965, under the charter of Citizens
National Bank of Englewood (4365) and under title of
"Citizens National Bank." The merged bank at the
date of merger had
First National Bank of Gate City, Gate City, Va.« (13502),
with
and Virginia National Bank, Norfolk, Va. (9885), which
had
merged Apr. 9, 1965, under charter and title of the latter
bank (9885). The merged bank at the date of merger
had
The Peoples National Bank of Farmville, Farmville, Va.
(9222), with
and Virginia National Bank, Norfolk Va. (9885), which
had
merged Apr. 9, 1965, under the charter and title of the
latter bank (9885). The merged bank at the date of
merger had
See footnotes at end of table.
156
Outstanding
capital stock
Surplus
Undivided profits
and reserves
Total assets
$100, 000
$760, 000
$114,408
$10, 749, 735
17,890,800
37, 109, 200
4, 982, 981
1, 244, 107, 569
18, 220, 800
37, 779, 200
4, 949, 306
1,254,650,217
150,000
500, 000
141, 642
9, 328, 045
6, 804, 510
12, 125,010
1, 989, 793
251,575,691
7,086,810
150, 000
12,625,010
250, 000
1,999,136
163, 533
260, 542, 307
8, 978, 708
11,428,180
36,103,070
6, 679, 220
708, 867, 916
11,543,180
36, 388, 070
6, 842, 754
717,068,467
802, 960
3,197, 040
0
56, 033, 278
6, 250, 000
6, 250, 000
1,673,046
260, 559, 165
7, 800, 000
8, 700, 000
1,673,046
311,592,444
100, 000
150, 000
142, 265
4, 793, 154
450, 000
800, 000
345, 578
23, 665, 673
610, 000
559, 280
950, 000
399, 100
424, 956
26, 510
28,454, 838
5, 235, 895
7,496,430
12, 320, 505
2,339, 174
268, 858, 640
7, 804, 035
100, 000
12,971,280
1, 000, 000
2, 365, 686
160, 047
274, 094, 535
5, 989, 829
1, 175, 000
2, 028, 690
218, 662
44, 192, 662
1, 550, 000
400,000
2, 753, 690
800, 000
378, 709
527, 355
50, 182, 487
23,402, 692
2, 730, 000
3, 500, 000
1,490, 734
125, 148, 032
3, 730, 000
4, 270, 000
1, 448, 090
148,550, 724
200, 000
400, 000
460, 241
12, 575, 628
8, 273, 825
21,976,175 -
5, 618, 530
423,112,581
8, 563, 825
22,286, 175
6, 078, 771
435,574, 954
105, 000
395, 000
249,457
10, 144, 803
8, 563, 825
22, 286, 175.
6, 078, 771
435, 574, 954
8, 737, 075
22,612,925
6, 328, 229
445, 425, 249
TABLE B-12—Continued
Mergers of National banks, or National and State banks, calendar 1965
Title and location of bank
Central National Bank of Washingtonville, Washingtonville,
N.Y. (13913), with
and County National Bank, Middletown, N.Y. (13956),
which had
merged Apr. 23, 1965, under charter and title of the
latter bank (13956). The merged bank at the date
of merger had
Bank of Millvale, Millvale, Pa., with
and Western Pennsylvania National Bank, Pittsburgh,
Pa. (2222), which had
merged Apr. 23, 1965, under charter and title of the
latter bank (2222). The merged bank at the date of
merger had
Dunkirk Trust Co., Dunkirk, N.Y., with
and Liberty National Bank & Trust Co., Buffalo, N.Y.
(15080), which had
merged April 27, 1965, under charter and title of the
latter bank (15080). The merged bank at the date of
merger had
The Farmers Bank, Sunbury, Ohio, with
and the First National Bank of Delaware, Delaware,
Ohio (243), which had
merged Apr. 30, 1965, under charter and title of the
latter bank (243). The merged bank at the date of
merger had
Central State Bank, Dalton, Pa., with
and the First National Bank of Carbondale, Carbondale,
Pa. (664), which had
merged Apr. 30, 1965, under charter of the latter bank
(664) and with title "First National Bank, Carbondale,
Pa." The merged bank at the date of merger had
Shirlington Trust Co., Inc., Arlington, Va.3 with
and First and Citizens National Bank of Alexandria,
Alexandria, Va. (651), which had
merged May 3, 1965, under charter of the latter bank
(651) and under title "First and Citizens National
Bank." The merged bank at the date of merger had. .
Sandborn Banking Co., Sandborn, Ind., with
and the American National Bank of Vincennes, Vincennes, Ind. (3864), which had
merged May 26, 1965, under charter and title of the
latter bank (3864). The merged bank at the date of
merger had
The Rossford Savings Bank, Rossford, Ohio, with
and the National Bank of Toledo, Toledo, Ohio (14586),
which had
merged June 7, 1965, under charter of the latter bank
(14586) and under title of "First National Bank of
Toledo." The merged bank at the date of merger
had
The National Bank of Sandford, Sandford, N.C.* (13791)
with.
and Southern National Bank of North Carolina, Lumberton, N.C. (10610), which had
merged June 12, 1965, under charter and title of the
latter bank (10610). The merged bank at the date of
merger had
The First National Bank of Petersburg, Petersburg, Pa.
(10313), with
and Union National Bank & Trust Co. of Huntingdon,
Huntingdon, Pa. (4965), which had
merged June 16, 1965, under charter and title of the
latter bank (4965). The merged bank at the date of
merger had
See footnotes at end of table.
Outstanding
capital stock
Surplus
Undivided profits
and reserves
Total assets
$75, 000
$175,000
$113,302
$5, 700, 026
1, 560, 600
2, 000, 000
842,229
69, 703, 374
1, 710, 600
125, 000
2,175,000
1, 575, 000
880, 532
357, 107
75,403,400
24, 690, 315
9, 863, 200
17,236,800
4,058, 664
579,178,980
10, 538, 200
250, 000
18, 261, 800
1, 000, 000
4, 415, 772
705, 315
603, 869, 295
15, 216, 555
5,425, 860
10, 960, 630
4, 241, 930
341, 524, 887
5, 825, 860
70, 000
11,960,630
70, 000
4, 748, 681
137, 567
356, 833, 381
3,013,974
250, 000
750, 000
216, 730
16,693,488
250, 000
50, 000
820, 000
100, 000
424, 297
119,566
19, 684, 101
3, 343, 595
496, 125
635,-000
239, 596
14, 591,454
611,125
538, 390
720, 000
674, 682
323, 786
221,925
17,949,034
15,313,409
1,485,000
3,515,000
1, 678, 850
97, 278, 024
1, 785, 000
25, 000
4, 215, 000
100, 000
2, 113,848
80, 709
112,591,434
1, 803, 742
880, 000
880, 000
1, 158, 681
27, 662, 667
942, 500
300, 000
942, 500
800, 000
1, 239, 390
325, 928
29, 379, 167
19, 519, 809
4,174,500
4, 325, 500
851, 149
139,068,265
4, 834, 500
5, 125, 500
817,078
158, 588, 075
250, 000
500, 000
183, 535
14, 768, 192
1, 550, 000
2, 843, 690
873, 527
49, 204,142
1, 883, 335
3, 260, 355
1, 055, 024
63, 706,449
50, 000
50, 000
14,600
1, 250, 004
295, 200
704, 800
314, 193
15, 025, 807
334, 960
765, 040
328, 793
16,275,812
157
TABLE B-12—Continued
Mergers of National banks, or National and State banks, calendar 1965
Title and location of bank
County National Bank of Long Island, Mineola, N.Y.1
(14951), with
and Valley National Bank of Long Island, Valley
Stream, N.Y. (11881), which had
merged June 21, 1965, under charter and title of the
latter bank (11881). The merged bank at the date of
merger had
The Citizens Trust Co., of Schenectady, Schenectady, N.Y.s
with
and National Commercial Bank & Trust Co., Albany,
N.Y. (1301), which had
merged June 25, 1965, under charter and title of the
latter bank (1301). The merged bank at the date of
merger had
First National Bank of Leland, Leland, Miss. (15215), with..
and the Commercial National Bank of Greenville,
Greenville, Miss (13403), which had
merged July 2, 1965, under charter and title of the
latter bank (13403). The merged bank at the date of
merger had
The First National Bank of Appalachia, Appalachia, Va.1
(9379), with
and the First National Exchange Bank of Virginia,
Roanoke, Va. (2737), which had
merged July 9, 1965, under charter and title of the
latter bank (2737). The merged bank at the date of
merger had
Security Trust Co., St. Louis,5 Mo., with-.
and Mercantile Trust Co., National Association, St.
Louis, Mo. (15452), which ha4
merged July 14, 1965, under charter and title of the
latter bank (15452). The merged bank at the date
of merger had
Bank of Giles County, Pearisburg, Va.,1 with
and the First National Exchange Bank of Virginia,
Roanoke, Va. (2737), which had
merged July 16, 1965, under charter and title of the
latter bank (2737). The merged bank at the date of
merger had
The National Deposit Bank of Arnold, Arnold, Pa.* (11896),
rith
and Western Pennsylvania National Bank, Pittsburgh,
Pa. (2222), which had
merged July 29, 1965, under charter and title of the
latter bank (2222). The merged bank at the date of
merger had
Pacific State Bank, Hawthorne, Calif,,6 with
and United States National Bank, San Diego, Calif.
(10391), which had
merged July 30, 1965, under charter and title of the
latter bank (10391). The merged bank at the date of
merger had
The First National Bank & Trust Co. of Schuylkill Haven,
Schuylkill Haven, Pa. (5216), with
and Pennsylvania National Bank & Trust Co., Pottsville,
Pa. (1663), which had
merged July 30, 1965, under charter and title of the
latter bank (1663). The merged bank at the date
of merger had
First National Bank of Long Beach, Long Beach, Qalif.s
(14632), with
and the Bank of California, National Association, San
Francisco, Calif. (9655), which had
merged July 31, 1965, under charter and title of the
latter bank (9655). The merged bank at date of
merger had
,
See footnotes at end of table.
158
Outstanding
capital stock
Surplus
Undivided profits
and reserves
Total assets
$618, 000
$400, 000
$135,697
$9, 245, 077
2, 273, 800
5, 500, 000
1,497,267
123, 025, 378
2, 505, 550
5, 900, 000
2,019,215
132,270,456
1, 200, 000
1,300,000
1,177,222
46,911,147
7, 998, 337
19, 653, 795
4, 752, 573
482,467, 477
9, 460, 837
100, 000
19, 653, 795
100, 000
6, 138, 714
48, 190
529, 166, 890
1, 800, 662
350, 000
1, 050, 000
229, 198
19,037,395
410, 000
1, 100, 000
367, 390
20, 838, 058
444, 000
556, 000
312,203
14, 073, 320
7,086,810
12,625,010
2, 614, 398
264,517,384
7, 575, 210
3, 645, 000
13, 181, 010
3, 645, 000
2, 882, 202
4,701,051
278, 590, 704
128, 052, 634
22, 756, 362
37, 533, 521
16, 366, 650
913, 306, 995
22, 756, 362
50, 000
37, 533, 521
. 250, 000
16, 366, 650
385,450
1,040,357,271
6, 669, 714
7, 575, 210
13, 181,010
2, 852, 499
280,917,540
7, 825, 210
13,431,010
3, 046, 493
287, 251, 230
300, 000
300, 000
399, 171
13,431,465
10, 778, 200
18, 261, 800
5, 493, 732
598, 293, 030
11,228,200
960, 246
18,411,800
1, 540, 000
5, 892, 904
670, 753
611,724,495
32, 891, 204
6, 242, 070
9, 301, 070
1, 227, 267
275, 071, 670
7, 698, 930
9, 301, 070
2,941,406
307, 962, 875
150, 000
750, 000
240, 574
10, 806, 455
1, 100, 000
1, 500, 000
734, 698
57, 352, 360
2, 157, 500
1, 800, 000
539, 535
68, 158, 378
530, 000
300, 000
94, 729
15, 206, 827
18, 220, 800
37, 779, 200
6,570,511
1, 285, 689, 925
18, 591, 800
38, 408, 200
6, 498, 288
1,300,443,842
TABLE B-l 2—Continued
Mergers of National banks, or National and State banks, calendar 1965
Title and location of bank
The Loudoun National Bank of Leesburg, Leesburg, Va.7
(1738), with
and First & Merchants National Bank, Richmond, Va.
(1111), which had
merged Aug. 31, 1965, under charter and title of the
latter bank (1111). The merged bank at date of
merger had
St. Paul National Bank, St. Paul, Va., (8547), with
and the First National Exchange Bank of Virginia,
Roanoke, Va. (2737), which had
merged Sept. 14, 1965, under charter and title of the
latter bank (2737). The merged bank at date of
merger had
The Bank of Glasgow, Inc., Glasgow, Va., with
and the First National Exchange Bank of Virginia,
Roanoke, Va. (2737), which had
merged Sept. 14, 1965, under charter and title of the
latter bank (2737). The merged bank at date of
merger had
Stanwood State Savings Bank, Stanwood, Mich., with
and First National Bank of Big Rapids, Big Rapids,
Mich. (14881), which had
merged Sept. 30, 1965, under charter and title of the
latter bank (14881). The merged bank at date of
merger had
The First National Bank of Blackstone, Blackstone, Va.
(9224), with
and the Fidelity National Bank, Lynchburg, Va. (1522),
which had
.'
merged Sept. 30, 1965, under-charter and title of the
latter bank (1522). The merged bank at date of
merger had
Wilshire National Bank, Los Angeles, Calif.i (14997), with..
and Heritage National Bank, Los Angeles, Calif. (15463),
which had
merged Oct. 15, 1965, under charter of the latter bank
(15463) and under title of "Heritage-Wilshire National
Bank." The merged bank at date of merger had
The First National Bank of Alexandria, Alexandria, Pa.
(11263),, with
and First-Grange National Bank of Huntingdon, Huntingdon, Pa. (31), which had
merged Oct. 30, 1965, under charter and title of the
latter bank (31). The merged bank at date of merger
had
Commonwealth Bank, Los Angeles, Calif., with
and City National Bank, Beverly Hills, Calif. (14695),
which had
merged Nov. 2, 1965, under charter and title of the latter
bank (14695). The merged bank at date of merger
had
Citizens First National Bank of Frankfort, Frankfort, N.Y.
(10351), with
'
and the Oneida National Bank & Trust Co. of Central
New York, Utica, New York (1392), which had
merged Nov. 5, 1965, under charter and title of the
latter bank (1392). The merged bank at date of
merger had. .'
The Merchants National Bank of5Hampton, Va. (6778) with.
Bank of Phoebus, Hampton, Va. with
and Virginia National Bank, Norfolk, Va. (9885), which
had
merged Nov. 5, 1965, under charter and title of the
latter bank (9885). The merged bank at the date of
merger had
See footnotes at end of table.
Outstanding
capital stock
Undivided profits
and reserves
Total assets
$250, 000
$250, 000
$471, 527
$10,911,046
13, 730, 530
18,267,700
8, 173, 501
499, 558, 754
14, 030, 530
100, 000
18,519,470
400, 000
8, 479, 230
131,969
510,033, 118
6,989,413
7,825,210
13,431,010
3, 304, 855
289, 403, 747
8,045,210
75, 000
13,831,010
125, 000
3,316,825
63,013
295, 773, 132
2, 162, 866
8, 045, 210
13,831,010
3, 316, 825
295, 773, 132
8, 116,460
50, 000
13,956,010
32, 000
3, 383, 588
84, 344
297, 928, 479
1, 692, 618
219, 790
220, 000
348, 181
10, 807, 725
253, 020
252, 000
449, 295
12, 500, 343
120, 000
250, 000
251,156
2,126, 250
3, 225, 000
797, 124
85,475, 616
2, 294, 250
765, 000
3, 475, 000
500, 000
1, 000, 281
261,611
90,455, 122
11, 152,770
1, 600, 000
640, 000
104, 606
7, 878,465
1,911,620
795, 810
104, 606
19, 156, 744
50, 000
100, 000
73, 396
1,477, 374
330, 500
1, 000, 000
313,675
21,081,780
370, 500
1,413,320
1, 110,000
730, 110
384, 071
208, 983
7, 804, 035
12,, 971,280
3, 140, 365
22, 556, 154
23, 256, 867
271, 166, 157
8, 000, 000
12,742,852
3, 349, 348
293, 905, 452
175,000
325, 000
2, 535, 700
8, 500, 000
3, 747, 364
187, 710, 850
2, 675, 700
450, 000
100;000
9, 325, 000
550, 000
300, 000
3, 646, 597
411,339
210,256
197,345,492
16, 922, 002
8, 353, 173
8, 737, 075
22, 612, 925
7, 873, 706
9, 209, 575
23, 540, 425
8, 495, 302
364, 233
4, 979, 506
9, 634, 643
505, 266, 004
530, 101, 174
159
TABLE B-12—Continued
Mergers of National banks, or National and State banks, calendar 1965
Title and location of bank
Patrick County Bank, Stuart, Va., with
and the First National Bank of Martinsville and Henry
County, Martinsville, Va. (7206), which had
merged Nov. 6, 1965, under charter and title of the latter
bank (7206). The merged bank at date of merger had.
The Sharon Center Banking Co., Sharon Center, Ohio, with.
and the Old Phoenix National Bank of Medina, Medina,
Ohio (4842), which had
merged Nov. 27, 1965, under charter and title of the
latter bank (4842). The merged bank at the date of
merger had
The Bank of Lexington, Lexington, S.C., with
and the First Commercial National Bank of South Carolina, Columbia, S.C. (13720), which had
merged Dec. 10, 1965, under the charter of the latter
bank (13720), and with title of "The First National
Bank of South Carolina." The merged bank at date
of merger had
The Citizens National Bank in West Milton, West Milton,
Ohio (14264), with
and the First Troy National Bank & Trust Co., Troy,
Ohio (3825), which had
merged Dec. 15, 1965, under charter of the latter bank
(3825), and under title of "The First National Bank
& Trust Company." The merged bank at the date
of merger had
Douglas County State Bank, Roseburg, Oreg.,2 with
and First National Bank of Oregon, Portland, Oreg.
(1553), which had
merged Dec. 22, 1965, under charter and title of the
latter bank (1553). The merged bank at the date of
merger had
Bank of Los Angeles, Los Angeles, Calif.,7 with
and United States National Bank, San Diego, Calif.
(10391), which had
merged Dec. 29, 1965, under charter and title of the
latter bank (10391). The merged bank at the date of
merger had
The First National Bank of Whippany, Whippany, N.T.2
(13173), with
and the First National Iron Bank of Morristown, Morristown, N.J. (1113), which had
merged Dec. 30, 1965, under the charter of the latter
bank (1113), and with title of "The First National Iron
Bank of New Jersey." The merged bank at the date of
merger had
Metamora State Savings Bank, Metamora, Mich,1 with
and the First National Bank of Lapeer, Lapeer, Mich.
(1731), which had
merged Dec. 31, 1965, under charter and title of the
latter bank (1731). The merged bank at the date of
merger had
The First National Bank of Boone, Boone, N.C. (15116),
with
and First National Bank of Eastern North Carolina,
Jacksonville, N.C. (14676), which had
,
merged Dec. 31, 1965, under charter and title of the
latter bank (14676). The merged bank at date of
merger had
,
The Peoples Savings Bank of Greenville, Ohio, Greenville,
Ohio, with
,
and the Second National Bank of Greenville, Greenville,
Ohio (2992) which had
merged Dec. 31, 1965, under charter of the latter bank
(2992) and under title of "The Second National
Bank of Greenville, Greenville, Ohio." The merged
bank at date of merger had
1
3
3
1 outside branch.
2 outside branches.
2 inside branches.
* 4 inside branches.
160
Outstanding
capital stock
Surplus
Undivided profits
and reserves
Total assets
$300,000
$91, 547
1, 000, 000
2, 000, 000
458, 975
38, 869, 072
1, 150, 000
50, 000
2, 300,000
130, 000
500, 522
91,961
44, 204,402
3, 631, 855
952, 875
952, 875
1,317,140
47, 855,429
1,027, 875
100,000
1, 027, 875
200, 000
1, 439, 101
41, 564
51,487, 285
4, 265, 939
3, 331,160
6, 765, 870
2,780, 135
163,419,782
3, 403, 660
7, 096, 340
2,618,857
167, 247, 482
125, 000
200, 000
85, 552
4, 725, 818
1, 000, 000
1, 500, 000
629, 813
33, 959, 043
1, 150,000
250, 000
1, 700, 000
1, 750, 000
690, 365
220, 395
38, 684, 861
34,454, 059
27, 135, 000
32, 865, 000
26, 606, 157
1,362,451, 111
27, 891, 250
2, 054, 960
37, 108, 750
1,027,480
23, 826, 552
8,640
1, 393, 401, 224
18,572,531
7, 698, 930
9, 301, 070
2, 154, 286
309, 001, 530
8, 983, 280
9, 301, 070
3, 961, 018
327, 574, 062
550, 000
475, 000
196, 600
26, 715, 757
2, 000, 000
2, 000, 000
1,165, 264
78, 086, 256
2, 880, 000
220, 000
2, 120, 000
70, 000
1, 386, 864
86, 326
104, 802, 013
5, 308, 981
289, 720
721, 420
833, 496
21,913,314
361, 220
939, 920
902,212
27, 344, 851
150, 000
75, 000
41,701
2, 005, 600
1, 850, 000
1,500, 000
376, 754
38, 255, 360
1, 950, 000
1, 800, 000
9,576
40, 083, 337
100, 000
200, 000
129,825
4, 530, 020
$100, 000
$5, 673, 904
220, 500
1, 500, 000
286, 001
16, 556, 849
265, 500
1, 700, 000
470, 826
21, 086, 869
5
6
7
1 inside branch.
4 outside, 1 inside branch.
1 inside, 1 outside branch.
TABLE
B-13
Domestic branches entering the National banking system, by de novo opening, merger, or conversion, by States, calendar 1965
Branches opened for business
Title and location of bank
than local
357
484
I
Birmingham Trust National Bank, Birmingham.
City National Bank of Birmingham
First National Bank of Decatur
State National Bank of Alabama, Decatur
First National Bank of Fairhope
The First National Bank of Florence
Shoals National Bank of Florence
The American National Bank of Huntsville
Peoples National Bank of Huntsville
The First National Bank of Montgomery
Baldwin National Bank of Robertsdale
The First National Bank of Anchorage
National Bank of Alaska, Anchorage
First National Bank of Arizona, Phoenix
The Valley National Bank of Arizona, Phoenix.,
ARKANSAS
The First National Bank of El Dorado
The Merchants National Bank of Fort Smith
The First National Bank of Fort Smith
First National Bank of Eastern Arkansas, Forrest City.
Phillips National Bank, Helena
Arkansas First National Bank of Hot Springs
First National Bank of Paragould
The First National Bank at Paris
National Bank of Commerce of Pine Bluff
CALIFORNIA
Community National Bank of Kern County, Bakersfield
City National Bank, Beverly Hills
Inyo-Mono National Bank, Bishop
Gateway National Bank, El Segundo
Surety National Bank, Encino, Los Angeles
Humboldt National Bank, Eureka
Heritage-Wilshire National Bank, Los Angeles
National Bank of Commerce at Los Angeles
Security First National Bank, Los Angeles
Newport National Bank, Newport Beach
Central Valley National Bank, Oakland
First National Bank & Trust Co., Ontario
Security National Bank of Monterey County, Pacific Grove
Palm Springs National Bank, Palm Springs
Sierra National Bank, Petaluma
First National Bank of San Diego
United States National Bank, San Diego
Bank of America National Trust & Savings Association, San Francisco.
The Bank of California, National Association, San Francisco
Crocker-Citizens National Bank, San Francisco
The First National Bank of San Jose
San Luis Obispo National Bank, San Luis Obispo
Northern California National Bank of San Mateo
Tiburon National Bank, Tiburon
San Joaquin Valley National Bank, Tulare
Citrus National Bank, West Covina
226-601—67-
161
TABLE B-13—Continued
Domestic branches entering the National banking system, by de novo opening, merger, or conversion, by States, calendar 1965
Branches opened for business
Title and location of bank
Local
CONNECTICUT
The Connecticut National Bank, Bridgeport
The State National Bank of Connecticut, Bridgeport. .
The Deep River National Bank, Deep River
Hartford National Bank & Trust Co., Hartford
The Home National Bank & Trust Co. of Meriden. . .
The First New Haven National Bank, New Haven. . .
The Second National Bank of New Haven
Litchfield County National Bank, New Milford
The Citizens National Bank of Putnam
Vernon National Bank, Vernon
Northern Connecticut National Bank, Windsor Locks.
DELAWARE
The First National Bank of Wilmington.
DISTRICT OF COLUMBIA
District of Columbia National Bank, Washington.
Madison National Bank, Washington
GEORGIA
The National Bank of Albany
The National Bank of Athens
The First National Bank of Atlanta
The Fulton Ntional Bank of Atlanta
The National Bank of Georgia, Atlanta
The First National Bank of Columbus
The Fourth National Bank of Columbus
The Citizens and Southern National Bank, Savannah.
Hawaii National Bank, Honolulu.
First Security Bank of Idaho, National Association, Boise.
The First National Bank of Malad City
First National Bank of Bloomington
The Fairland National Bank, Fairland
Lincoln National Bank & Trust Co. of Fort Wayne....
Bank of Indiana, National Association, Gary
The National Bank of Greenwood
Merchants National Bank & Trust Co. of Indianapolis.
The American National Bank of Noblesville
The Second National Bank of Richmond
The Shelby National Bank of Shelby ville
The American National Bank of Vincennes
IOWA
National Bank of Burlington
City National Bank of Cedar Rapids
The First National Bank of Denison
South Des Moines National Bank, Des Moines.
First National Bank of Eldora
First National Bank in Fairfield
First National Bank, Fort Dodge, Iowa
Spencer National Bank, Spencer
The National Bank of Waterloo
162
Other
than local
Total
TABLE B-l 3—Continued
Domestic branches entering the National banking system, by de novo opening, merger, or conversion, by States, calendar 1965
Branches opened for business
Title and location of bank
Local
Other
The Second National Bank of Ashland
First Security National Bank & Trust Go. of Lexington.
The Second National Bank & Trust Co. of Lexington...
The National Bank, Middlesboro
The Newport National Bank, Newport
The First National Bank of Nicholasville
The Owensboro National Bank, Owensboro
Louisiana National Bank of Baton Rouge
First National Bank of Jefferson Parish, Gretna.
Citizens National Bank & Trust Go. of Houma.
First National Bank of West Monroe
The First National Bank of Farmington
The Peoples National Bank of Farmington
First-Manufacturers National Bank of Lewiston and Auburn, Lewiston.
Canal National Bank, Portland
MARYLAND
Maryland National Bank, Baltimore
National City Bank of Baltimore
First National Bank of Harford County, Bel Air
University National Bank, College Park
Farmers and Mechanics National Bank, Frederick
The Peoples National Bank of Hancock
First National Bank & Trust Co., Havre de Grace
The Central National Bank of Maryland, Hillandale
The Citizens National Bank, Laurel
The Garrett National Bank in Oakland
American National Bank of Maryland, Silver Spring
Peoples National Bank of Maryland, Suitland
The First National Bank of Southern Maryland of Upper Marlboro.
Metropolitan National Bank of Maryland, Wheaton
MASSACHUSETTS
The First National Bank of Amherst
Commonwealth National Bank, Boston
The First National Bank of Boston
New England Merchants National Bank of Boston
The Lincoln National Bank of Chelsea
The Fall River National Bank, Fall River
The Falmouth National Bank, Falmouth
The Framingham National Bank, Framingham
The First National Bank of Gardner
Bay State Merchants National Bank of Lawrence
Needham National Bank, Needham
Northampton National Bank, Northampton
First National Bank of Cape Cod, Orleans
The Palmer National Bank, Palmer
Hampshire National Bank of South Hadley
The Martha's Vineyard National Bank of Tisbury, Vineyard Haven .
The Wellesley National Bank, Wellesley
The Mechanics National Bank of Worcester
Worcester County National Bank, Worcester
163
TABLE B-l 3—Continued
Domestic branches entering the National banking system, by de novo opening, merger, or conversion, by States, calendar 1965
Branches opened for business
Title and location of bank
Other
than local
Security National Bank of Battle Creek
Peoples National Bank & Trust Go. of Bay City
First National Bank of Big Rapids
The Southern Michigan National Bank of Coldwater....
City National Bank of Detroit
Manufactures National Bank of Detroit
Michigan Bank, National Association, Detroit
National Bank of Detroit
First National Bank in Howell
The National Bank of Jackson
The American National & Trust Co. of Kalamazoo
The First National Bank & Trust Co. of Kalamazoo
Michigan National Bank, Lansing
The National Lumberman's Bank of Muskegon
Hackley Union National Bank & Trust Co. of Muskegon.
The First National Bank of Negaunee
Community National Bank of Pontiac
Second National Bank of Saginaw
Valley National Bank of Saginaw
St. Clair Shores National Bank, St. Clair Shores
Central National Bank of St. Johns
National Bank of Southfield
Troy National Bank, Troy
The National Bank of Commerce of Columbus.
Citizens National Bank, Florence
The First National Bank of Greenville
First National Bank of Iuka
First National Bank of Jackson
Deposit Guaranty National Bank, Jackson
First National Bank in Meridian
First Citizens National Bank, Tupelo
MISSOURI
Belt National Bank of St. Joseph
Mercantile Trust Co. National Bank, St. Louis.
The Union National Bank of Springfield
The First National Bank of West Plains
NEBRASKA
The Overland National Bank of Grand Island.
First National Bank of Nevada, Reno
Security National Bank of Nevada, Reno.
NEW HAMPSHIRE
The Mechanicks National Bank of Concord. . .
The National Bank of Lebanon
The Merchants National Bank of Manchester.
The First National Bank of Newport
The First National Bank of Portsmouth
NEW JERSEY
First Merchants National Bank, Asbury Park
The Farmers & Merchants National Bank of Bridgeton
Mechanics National Bank of Burlington County, Burlington.
First Camden National Bank & Trust Co., Camden
The National Union Bank of Dover
164
TABLE B-l 3—Continued
Domestic branches entering the National banking system, by de novo opening, merger, or conversion, by States, calendar 1965
Branches openedfor business
Title and location of bank
Local
Other
NEW JERSEY—continued
The First National Bank of Middlesex County, East Brunswick. . .
Eatontown National Bank, Eatontown
The National State Bank, Elizabeth
Citizens National Bank, Englewood
First Bank & Trust Co., National Association, Fords
Franklin Lakes National Bank, Franklin Lakes
The Hackettstown National Bank, Hackettstown
The Peoples National Bank of Hackettstown
Peoples National Bank of Camden County, Laurel Springs
Amboy-Madison National Bank, Madison Township
The First National Bank of Marlton
The Farmers & Merchants National Bank of Matawan
Keansburg-Middletown National Bank, Middletown
The First National Iron Bank of New Jersey, Morristown
The Peoples National Bank of New Brunswick
First National Bank of Passaic County, Paterson
Broadway National Bank & Trust Co. of Pitman
Citizens First National Bank of Ridgewood
The First National Bank of Somerset County, N.J., Somerville. . .
The First National Bank of South Plainfield
The First National Bank of Toms River, N.J., Toms River
The First National Bank of Tuckerton
NEW MEXICO
Albuquerque National Bank, Albuquerque.
The Clovis National Bank, Clovis
First National Bank of Hobbs
The First National Bank of Portales
The Portales National Bank, Portales
The First National Bank of Santa Fe
Santa Fe National Bank
NEW YORK
National Commercial Bank & Trust Co., Albany
The National Bank of Auburn
The Fishkill National Bank, Beacon
First-City National Bank of Binghamton, N.J., Binghamton
Liberty National Bank & Trust Co., Buffalo
The National Exchange Bank of Castleton on Hudson
Peninsula National Bank, Cedarhurst
The Chester National Bank, Chester
The National Bank of Coxsackie
The First National Bank of Glen Head
The First National Bank of Highland
Security National Bank of Long Island, Huntington
First National Bank & Trust Co. of Ithaca
County National Bank, Middletown
Franklin National Bank, Mineola
Nanuet National Bank, Nanuet
Highland National Bank of Newburgh
The Chase Manhattan Bank (National Association), New York
First National City Bank, New York
Royal National Bank of New York
The North Creek National Bank, North Creek
The Peoples National Bank of Long Island, Patchogue
Farmers-Matteawan National Bank, Poughkeepsie
Marine Midland National Bank of Southeastern New York, Poughkeepsie.
The Mohawk National Bank of Schenectady
First National Bank of Scotia
The First National Bank of Spring Valley
The Merchants National Bank & Trust Co. of Syracuse
Marine National Bank of Troy
The Oneida National Bank & Trust Co. of Central New York, Utica
1
126
11
165
TABLE B-13—Continued
Domestic branches entering the National banking system, byde novo opening, merger, or conversion, by States, calendar 1965
Branches opened for business
Title and location of bank
Local
NEW YORK—continued
Valley National Bank of Long Island, Valley Stream
The National Bank of Northern New York, Watertown.
National Bank of Westchester, White Plains
The First National Bank of Woodridge
The National Bank of Orange and Ulster Counties, Goshen.
NORTH CAROLINA
First Union National Bank of North Carolina, Charlotte.
North Carolina National Bank, Charlotte
,
First National Bank of Lincolnton
Southern National Bank of North Carolina, Lumberton. .
The Arcanum National Bank, Arcanum
First National Bank of Archbold
The Northeastern Ohio National Bank, Ashtabula
The Athens National Bank, Athens
First National Bank of Canton
The First National Bank at Carrollton
The Capital National Bank, Cleveland
Central National Bank of Cleveland
The National City Bank of Cleveland
Society National Bank of Cleveland
The Huntington National Bank of Columbus
The Ohio National Bank of Columbus
The Winters National Bank & Trust Co. of Dayton
The First National Bank of Delaware
The First National Bank at East Palestine
The Liberty National Bank of Fremont
The First National Bank & Trust Co. of Hamilton
The Fairfield National Bank of Lancaster
Tower National Bank of Lima
The Old Phoenix National Bank of Medina
First National Bank of Middletown
The First-Knox National Bank of Mount Vernon
The First National Bank of Newark
The New Carlisle National Bank, New Carlisle
The National Bank of Orrville
The Piqua National Bank & Trust Co., Piqua
The Security Central National Bank of Portsmouth
Belmont County National Bank, St. Clairsville, St. Clairsville. . .
The First National Exchange Bank of Sidney
First National Bank of Toledo
The First National Bank & Trust Co., Troy
The Second National Bank of Warren
The Clinton County National Bank & Trust Co. of Wilmington.
The Citizens National Bank of Wooster
The First National Bank of Zanesville
OKLAHOMA
Cordell National Bank, Cordell.
The First National Bank of Cushing.
First National Bank of Oregon, Portland
United States National Bank of Oregon, Portland.
PENNSYLVANIA
First National Bank in Bangor
First National Bank, Carbondale
Cambria County National Bank, Carrolltown
The Chalfont National Bank, Chalfont
166
Other
TABLE B-13—Continued
Domestic branches entering the National banking system, by denovo opening, merger, or conversion, by States, calendar 1965
Branches openedfor business
Title and location of bank
Other
than local
PENNSYLVANIA—continued
National Valley Bank & Trust Co., Chambersburg
The Cheltenham National Bank, Cheltenham
The Doylestown National Bank & Trust Co., Doylestown
The First National Bank of Erie
Marine National Bank, Erie
The Citizens National Bank of Evans City
The Ffrst National Bank of Fredericktown
The First National Bank of Freeport
Peoples National Bank of Susquehanna County, Hallstead
Peoples National Bank of Hanover
Community National Bank of Somerset County, Hooversville
First-Grange National Bank of Huntingdon
Union National Bank and Trust Co. of Huntingdon
The Moxham National Bank of Johnstown
United States National Bank in Johnstown
Commercial National Bank of Westmoreland County, Latrobe
The Farmers National Bank of Lititz
The First National Bank of Mapleton
The National Bank of McKeesport
The Juniata Valley National Bank, Mifflintown
Cumberland County National Bank & Trust Co., New Cumberland.
The First National Bank & Trust Co. of Newtown
The Peoples National Bank & Trust Co. of Norristown
The Philadelphia National Bank, Philadelphia
Provident National Bank, Philadelphia
Mellon National Bank & Trust Co., Pittsburgh
Pittsburgh National Bank, Pittsburgh
The Union National Bank of Pittsburgh
Western Pennsylvania National Bank, Pittsburgh
Pennsylvania National Bank & Trust Co., Pottsville
Union National Bank & Trust Co. of Souderton
The First-Stroudsburg National Bank, Stroudsburg
Gallatin National Bank, Uniontown
The Warren National Bank, Warren
Citizens National Bank & Trust Co. of Waynesboro
National Bank of Chester County & Trust Co., West Chester
Miners National Bank of Wilkes-Barre
RHODE ISLAND
Industrial National Bank of Rhode Island, Providence
SOUTH CAROLINA
County National Bank, Blackville
The South Carolina National Bank of Charleston
„
The Citizens & Southern National Bank of South Carolina, Charleston.
The First National Bank of South Carolina, Columbia
The First National Bank of Holly Hill
First State National Bank, Jackson
The National Bank of South Carolina of Sumter
SOUTH DAKOTA
Northwestern National Bank of Sioux Falls.
Valley National Bank of Sioux Falls
American National Bank & Trust Co. of Chattanooga. . .
The Hamilton National Bank of Chattanooga
The First National Bank of Franklin County at Decherd.
The First National Bank of Dickson
The First National Bank of Jackson
The Hamilton National Bank of Knoxville
167
TABLE B-13—Continued
Domestic branches entering the National banking system, byde novo opening, merger, or conversion, by States, calendar 1965
Branches openedfor business
Title and location of bank
Local
TENNESSEE—continued
The First National Bank of Loudon
The First National Bank of Memphis
National Bank of Commerce in Memphis. . ,
Union Planters National Bank of Memphis.
National Bank of Murfreesboro
First American National Bank of Nashville.
National Bank of Newport
The First National Bank of Rogersville....
First National County Bank, Spring City. . .
The First National Bank of Springfield
The First National Bank of Tullahoma
First Security Bank of Utah, National Association, Ogden..
Zions First National Bank, Salt Lake City
The
The
The
The
County National Bank of Bennington
Enosburg Falls National Bank, Enosburg Falls.
First National Bank of North Bennmgton
First National Bank of White River Junction. . ,
First & Citizens National Bank, Alexandria
Mount Vernon National Bank & Trust Co. of Fairfax County, Annandale.
Commonwealth National Bank of Arlington
Security National Bank, Baileys Cross Roads
American National Bank, Fredericksburg
The Peoples National Bank of Leesburg
Rockbridge National Bank of Lexington
The First National Bank of Lexington
The Fidelity National Bank, Lynchburg
The National Bank of Manassas
The Peoples National Bank of Manassas
The First National Bank of Martinsville and Henry County, Martinsville.
Virginia National Bank, Norfolk
Seaboard Citizens National Bank, Norfolk
The National Bank of Orange
The Pulaski National Bank, Pulaski
First Valley National Bank, Rich Creek
Richmond National Bank, Richmond
First & Merchants National Bank, Richmond
The Central National Bank of Richmond
The First National Exchange Bank of Virginia, Roanoke
The National Bank of Rosslyn
Guardian National Bank of Fairfax County, Springfield
The First National Bank of Stuart
The Peoples National Bank of Warrenton
The First National Bank of Yorktown
WASHINGTON
Timbermens National Bank of Hoquiam
First National Bank in Port Angeles
The National Bank of Commerce of Seattle
Peoples National Bank of Washington, Seattle.
Seattle-First National Bank, Seattle
First National Bank in Spokane
Central Bank National Association, Tacoma. .
National Bank of Washington, Tacoma
Puget Sound National Bank, Tacoma
Other
than local
TABLE B-14
Domestic branches of National
banks closed, by States, calendar 1965
Branches closed
Charter
No.
Title and location of bank
Other
than local
Local
Total
25
Total
17
42
1
1
1
1
2
1
CALIFORNIA
10391
13044
1741
14980
13178
Bank of America National Trust & Savings Association, San Francisco
Crocker-Citizens National Bank San Francisco
San Francisco National Bank, San Francisco
. .
The First National Bank of Vista
13759
American Fletcher National Bank & Trust Co., Indianapolis
1
1
2
INDIANA
1
1
1
1
1
1
1
1
1
1
1
1
IOWA
2511
2763
13697
3105
The Merchants National Bank of Cedar Rapids
First National Bank, Fort Dodge, Iowa
First National Bank, Iowa City Iowa
The First National Bank of Waverly
8399
The National Bank of Commerce of Wellington
14320
Liberty National Bank & Trust Co of Louisville
13776
The Garrett National Bank in Oakland
475
779
13411
New England Merchants National Bank of Boston
Plymouth-Home National Bank, Brockton
First National Bank of Webster
14918
National Bank & Trust Co. of Traverse City
KANSAS
KENTUCKY
1
1
1
1
1
2
2
1
2
MARYLAND
MASSACHUSETTS
2
MICHIGAN
-
1
NEW JERSEY
3866
1
The First National Bank of Somerset County, Bound Brook
1
NEW MEXICO
13814
First National Bank in Albuquerque
1
1
2
6
1
1
2
6
1
1
2
1
2
1
NEW YORK
1461
12892
12553
13962
First National City Bank New York
Lafayette National Bank of Brooklyn in New York, New York
Water Street National Bank New York
.
...
The National Bank of Windham
14191
252
The Girard Battles National Bank, Girard
Pittsburgh National Bank, Pittsburgh
PENNSYLVANIA
169
TABLE B-14—Continued
Domestic branches of National banks closed, by States, calendar 1965
Branches closed
Charter
No.
Title and location of bank
Local
SOUTH CAROLINA
14425
2044
13720
The Citizens & Southern National Bank of South Carolina, Charleston.
The South Carolina National Bank of Charleston
The First Commercial National Bank of South Carolina, Columbia
15293
Guardian National Bank of Fairfax County, Springfield.
VIRGINIA
WASHINGTON
Central Bank National Association, Tacoma
170
Other
than local
Total
TABLE
B-15
Principal assets, liabilities, and capital accounts of National
banks, by deposit size, year end
1964—65
[Dollar amounts in millions]
Number
of banks
Total
1964
Banks with deposits of—
Less than $ 1 0
1.0 to 1.9
2.0 to 4.9 . .
5.0 to 9 9
10.0 to 24.9
25.0 to 49.9 .
50 0 to 99 9
100.0 to 499.9
Over 500.0
Total
1965
Banks with deposits of—
Less than $1.0
1.0 to 1.9
2.0 to 4.9
5.0 to 9.9
10.0 to 24.9
25 0 to 49 9
50.0 to 99.9
100.0 to 499.9
Over 500 0
Total
assets
4, 773 $190, 113
Cash and Loans and
cash items discounts
$34, 066
Total
U.S.
Government
obligations
$95, 577 $54, 367
$33, 537
Deposits
Total
$2, 789 $169,617
Demand
Time and
savings
$98, 660 $70, 957
Capital
stock
Surplus,
Capital
undivided
notes and profits,
and
debentures
reserves
$4, 315
$475
15
44
163
0
0
$10, 258
301
220
227
655
1, 133
57
391
2,619
4, 659
8, 768
6, 524
7,307
23, 712
44, 622
20
213
1,847
3, 778
7, 332
5,254
5,524
13, 888
33, 101
405
273
329
944
1, 926
4
31
13
114
313
1, 008
669
728
2, 107
4, 701
31,896
3, 158
193, 860
107, 881
85, 979
4, 966
1, 134
11, 334
18
150
1, 247
2,284
4, 009
2 905
2, 704
6, 372
12, 206
2
9
90
159
323
248
236
670
1,421
50
461
4,466
8, 706
17, 252
13 203
13, 194
38, 089
98, 438
37
289
2, 532
4,686
8, 995
7, 046
7, 126
22, 669
54, 501
14
172
1, 933
4, 020
8,258
6, 158
6,068
15,420
43, 937
5
25
166
240
417
332
336
952
2,492
0
0
7
51
363
112
725
5 048
9, 342
17, 801
13, 039
14,210
41, 793
88, 042
26
133
830
1 433
2,671
1, 929
2, 311
8, 223
16, 509
44
323
2 276
4 229
8, 341
6 209
6, 696
20, 969
46, 491
35
249
1,832
3, 478
6,322
4,506
4,806
11,358
21, 780
32
209
1, 370
2 393
4, 128
2, 891
3, 136
7, 147
12, 231
4,815
219, 103
36, 880
118,266
57,310
68
301
1,296
1, 215
1, 109
385
192
187
64
542
5,044
9, 663
19, 047
14 621
14, 634
42, 528
112, 960
13
99
812
1,432
2, 708
2 057
2,211
7, 610
19. 938
27
246
2,382
4, 528
9, 238
7 195
7, 394
22, 413
64, 842
21
186
1, 735
3,475
6,612
4, 907
4,617
11, 209
24, 547
62
Fixed
assets
78
604
4,466
8,437
16, 100
11, 778
12,831
37, 600
77, 723
114
394
1 303
1 181
1, 029
339
185
176
52
NOTE: Data may not add to totals because of rounding.
Securities
5
15
82
150
Dashes indicate amounts under $500,000.
216
.
11
18
21
111
972
18
70
372
585
602
1, 060
752
720
2, 120
5,659
TABLE
B-16
Dates of reports of condition of National
banks,
1914—66
[For dates of previous calls, see Annual Report for 1920, vol. 2, table No. 42, p . 150]
Year
Feb.
13
Mar.
Apr.
3
6
12
30
30
30
1
1
1
10
12
4
28
5
10
31
23
27
27
25
5
4
4
4
4
13
20
31
Sept.
Oct.
12
2
12
11
31
10
17
20
1
17
31
\2
15
8
6
15
14
10
3
31
31
31
31
24
'"'25'
17
1
12
26
18
15
26
5
28
2
24
18
30
6
1
4
10
5
30
7
5
26
23
24
30
11
31
31
31
31
30
31
31
31
31
30
31
31
31
31
31
30
31
31
31
31
31
31
31
31
6
3
27
28
30
1
13
20
31
31
27
31
31
31
29
31
29
31
31
31
31
4
29
30
Dec.
10
28
30
30
6
10
15
30
30
29
30
30
Nov.
CO CO <T
12
15
C<"
20
15
11
10
30
30
30
29
30
30
30
30
30
29
30
30
30
o oo o c
12
11
24
9
Aug.
29
30
31
7
29
26
14
4
July
COCO CO Cf
30
30
29
30
30
30
30
30
28
...
June
30
23
30
20
29
30
30
30
30
30
4
4
7
5
4
4
28
21
172
May
CO CO CO CO
1914
1915
1916
1917
1918
1919
1920
1921
1922.
1923
1924
1925
1926.
1927
1928
1929
1930
1931
1932
1933
1934
1935
1936
1937
1938
1939
1940
1941
1942
1943
1944
1945
1946
1947.
1948
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961..
1962
1963 .
1964
1965..
1966
Jan.
28
20
31
31
31
NOTES
Act of Feb. 25, 1863, provided for reports of condition on
the 1st of each quarter before commencement of business.
Act of June 3, 1864—1st Monday of January, April, July,
and October, before commencement of business, on form prescribed by Comptroller (in addition to reports on 1st Tuesday
of each month showing condition at commencement of business in respect to certain items; i.e., loans, specie, deposits,
and circulation).
Act of Mar. 3, 1869, not less than 5 reports per year, on form
prescribed by Comptroller, at close of business on any past date
by him specified.
Act of Dec. 28, 1922, minimum number of calls reduced from
5 to 3 per year.
Act of Feb. 25, 1927, authorized a vice president or an
assistant cashier designated by the board of directors to verify
reports of condition in absence of president and cashier.
Act of June 16, 1933, requires each National bank to furnish
and publish not less than 3 reports each year of affiliates other
than member banks, as of dates identical with those for which
the Comptroller shall during such year require reports of
condition of the bank. The report of each affiliate shall contain such information as in the judgment of the Comptroller
shall be necessary to disclose fully the relations between the
affiliate and the bank and to enable the Comptroller to inform
himself as to the effect of such relations upon the affairs of the
bank.
Sec. 21 (a) of the Banking Act of 1933 provided, in part,
that after June 16, 1934, it would be unlawful for any private
bank not under State supervision to continue the transaction
of business unless it submitted to periodic examination by the
Comptroller of the Currency or the Federal Reserve bank of the
district, and made and published periodic reports of conditions
the same as required of National banks under sec. 5211,
U.S.R.S. Sec. 21 (a) of the Banking Act of 1933, however,
was amended by sec. 303 of the Banking Act of 1935, approved
Aug. 23, 1935, under the provisions of which private banks
are no longer required to submit to examination by the Comptroller or Federal Reserve bank, nor are they required to make
to the Comptroller and publish periodic reports of condition.
(5 calls for reports of condition of private banks were made
by the Comptroller, the first one for June 30, 1934, and the
last one for June 29, 1935.)
Sec. 7 (a) (3) of the Federal Deposit Insurance Act (Title
12, U.S.C., sec. 1817(a)) of July 14, 1960, provides, in part,
that, effective Jan. 1, 1961, each insured National bank shall
make to the Comptroller of the Currency 4 reports of condition annually upon dates to be selected by the Comptroller, the
Chairman of the Board of Governors of the Federal Reserve
System, and the Chairman of the Board of Directors of the
Federal Deposit Insurance Corporation, or a majority thereof.
2 dates shall be selected within the semiannual period of January to June, inclusive, and 2 within the semiannual period of
July to December, inclusive. Sec. 161 of Title 12 also provides that the Comptroller of the Currency may call for additional reports of condition, in such form and containing such
information as he may prescribe, on dates to be fixed by him,
and may call for special reports from any particular association whenever in his judgment the same are necessary for use
in the performance of his supervisory duties.
173
TABLE
B-17
Total and principal assets of National banks, by States, June 30,
[Dollar amounts in millions]
Number
of banks
. .
...
California
Colorado
Delaware
District of Columbia
Florida
Georgia
Hawaii
Idaho
Illinois
Iowa
Kansas
Kentucky
Louisiana
Maryland
Michigan
Missouri
Nevada
New Hampshire
. ...
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota.
Texas
Utah
Vermont
Virginia
Washington
West V i r g i n i a . . .
Wyoming
Virgin Islands
District of Columbia—allf.
Cash
assets*
U.S.
State and
GovernLoans and
Other
local
ment securities, bonds,
discounts,
obliganet
net
notes, net
tions, net
Federal Direct
funds
lease
financing
sold
Fixed
assets
$193,599 $31,595 $30, 323 $20, 460
$2, 439
$102, 059
$1,059
$188
$2, 895
433
46
180
152
3,214
340
194
6
329
1,084
268
23
119
131
2,713
163
239
28
13
40
17
251
6
10
1
3
112
1, 130
139
1,016
521
15,613
1, 190
1,015
12
677
2,298
21
2
20
2
26
13
4
1
4
31
0
0
38
8
39"
17
449
521
56
77
2,807
783
306
318
262
466
61
313
65
107
3,308
935
284
379
271
522
72
205
38
60
2, 003
370
129
211
150
269
49
21
1,437
220
390
9, 108
2, 130
693
850
685
1,265
255
20
0
6
117
55
7
1
2
29
5
3
0
0
21
1,935
5,504
8,052
4,197
600
3 870
596
1,606
472
438
332
1,140
1,264
748
97
755
83
305
62
72
337
590
1,523
696
114
558
109
243
70
57
169
453
938
375
71
393
53
135
45
31
19
16
47
87
5
25
9
20
7
1,000
3,110
4,075
2, 182
296
2,025
323
866
253
261
42
21
37
6
0
41
3
3
7
2
0
1
3
11
6
1
0
0
147
34
198
30
42
223
222
12
377
4
6,300
699
20, 619
1,758
518
8,877
3,156
2,533
14, 169
762
786
112
3,384
323
60
1,320
620
346
2,070
76
1,052
144
2,472
195
111
1,593
612
378
2,261
61
893
43
2,472
166
54
973
261
234
2,080
171
117
7
206
40
13
91
54
38
179
4
3,284
353
11, 118
982
264
4,645
1,526
1,422
7, 108
431
28
24
83
2
0
79
12
18
97
6
24
33
75
544
13
27
121
31
79
110
39
1
920
576
3,538
13, 694
648
276
3,071
3,472
1,000
2,885
403
33
176
66
691
2,704
99
33
452
571
152
480
61
3
154
132
556
2,072
52
46
469
524
289
523
86
8
62
44
348
1,269
67
22
286
317
85
272
23
1
24
9
24
188
4
3
40
30
12
46
4
0
476
307
1,837
6,888
405
164
1,743
1,908
436
1,488
216
21
5
0
6
125
7
2
9
15
4
4
0
0
15
2,393
423
546
100
10
1,255
10
4,803
United States
Alabama
Alaska
Arizona
Total
assets
1965
84
5
4
65
94
117
27
5
8
192
2 333
269
1,640
1 050
26, 632
2, 178
1,773
25
1,356
5,066
401
35
203
205
3,835
394
257
3
244
922
54
2
9
415
125
102
170
81
47
21
2,592
396
663
18, 204
4,445
1,470
1,820
1,422
2,628
458
50
94
97
193
34
96
48
125
3
50
* Cash, balances with other banks, and cash items in process of collection.
t Includes National and non-National banks in the District
174
65
444
4
378
85
26
31
24
19
4
89
2
1
0
0
1
0
2
29
0
3
1
1
10
0
0
0
0
0
1
1
1
2
41
1
21
133
12
12
129
54
22
19
35
9
22
64
92
62
14
37
12
21
18
8
89
12
240
32
12
114
52
54
178
8
19
12
50
305
10
4
54
61
16
51
10
0
0
30
of Columbia which are supervised by the Comptroller of the
Currency.
NOTE: Data may not add to totals because of rounding.
Dashes indicate amounts less than $500,000.
TABLE
B-18
Total and principal liabilities of National banks, by States, June 30, 1965
[Dollar amounts in millions]
Total
liabilities
Total
deposits
Demand
deposits,
total
Time and savings deposits,
total
Demand
deposits,
IPC*
Time
deposits,
IPC
Federal
funds
purchased
$177, 746
$171,528
$94, 826
$76, 702
$68, 987
$69, 931
$959
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
District of Columbia
Florida
2,138
254
1, 507
962
24, 808
1,999
1,630
23
1,254
4,643
2,091
249
1,470
950
23, 977
1,952
1,563
22
1,224
4,508
1,304
132
739
626
10, 324
1,092
1,013
11
809
2,741
786
116
731
324
13,653
860
550
11
415
1,768
965
101
554
446
8, 198
834
822
10
702
2,029
748
72
705
311
12,017
786
504
11
401
1,523
2
2
0
1
59
13
4
0
9
18
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
2,361
353
616
16, 773
4,098
1,353
1,651
1,294
2,400
415
2,298
347
606
16, 127
3,915
1,323
1,631
1,276
2,350
400
1,560
186
341
8,820
2,361
863
1,087
848
1,592
229
737
161
265
7,307
1,554
460
544
428
757
171
124
252
6,219
1,632
594
703
674
1, 127
193
658
133
264
6,903
1,443
447
508
404
669
167
0
0
0
142
73
16
2
0
8
2
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
1,776
4,989
7,530
3,871
547
3,514
554
1,465
436
394
1,706
4,655
7,364
3,719
539
3,425
535
1,429
426
372
1,093
3,341
3,542
2, 123
355
2,259
281
982
239
257
613
1,313
3,822
1,596
184
1,166
253
447
187
115
2,393
2,524
1,369
242
1,481
218
682
168
200
576
1,230
3,403
1,516
179
1,056
238
439
179
107
31
47
1
44
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
5,817
647
18, 683
1,605
481
8, 140
2,849
2,349
12, 874
708
5,624
638
17,503
1, 542
471
7,916
2, 785
2,285
12, 468
687
2,869
397
9,419
1,000
235
4,217
1,845
1,076
6,203
285
2,755
241
8,084
542
236
3,700
941
1,210
6,265
402
2,273
279
6,426
742
188
3,085
1,253
847
4,791
207
2,672
205
7,277
446
223
3,482
875
1,064
5,753
375
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Virgin Islands
843
533
3,264
12,519
592
252
2,804
3,208
903
2,668
367
31
806
523
3, 171
12, 112
579
246
2,732
3, 120
887
2,599
358
29
658
273
1, 879
7,631
273
91
1,447
1,759
513
1,406
191
10
147
250
1,292
4,481
306
155
1,285
1,361
373
1, 193
168
19
520
205
1, 189
5,370
201
78
1, 137
1,285
391
1,034
136
133
225
1, 165
3,825
279
152
1,213
1,346
371
1,094
149
11
2,220
2,167
1,412
756
1,244
736
United States
District of Columbia—all f
*IPC deposits are those of individuals, partnerships, and
corporations.
•{•Includes National and non-National banks in the District
27
5
8
0
1
141
20
1
14
10
0
42
2
9
169
3
4
11
2
2
1
0
of Columbia which are supervised by the Comptroller of the
Currency.
NOTE: Data may not add to totals because of rounding.
Dashes indicate amounts less than $500,000.
175
TABLE
B-19
Capital accounts of National banks, by States, June 30, 1965
[Dollar amounts in millions]
United States
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
District of Columbia
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Total capital accounts
Debentures
$15, 853
$814
196
15
133
87
1,824
179
143
2
102
423
231
43
46
1,431
347
117
169
128
228
43
Preferred
stock
Common
stock
Surplus
Undivided
profits
$4, 578
$7,311
$2, 741
63
5
30
27
498
60
42
1
39
5
18
20
356
36
21
165
82
4
57
37
815
79
79
1
54
177
37
10
0
10
13
0
0
0
51
9
14
512
87
32
50
31
53
17
92
14
25
677
172
54
77
64
131
15
28
9
5
190
67
29
39
30
40
11
2
10
26
1
145
3
0
0
0
16
$29
29
19
53
159
515
522
326
53
356
42
141
36
44
39
0
1
25
0
0
0
0
40
119
138
106
14
102
16
41
17
9
78
304
238
141
36
151
16
60
15
23
35
74
94
74
2
73
10
37
4
10
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
484
51
1,936
152
38
737
307
184
1,295
54
27
0
330
15
0
24
18
0
22
0
139
19
532
38
13
207
85
60
295
14
229
19
696
75
15
377
120
67
735
30
78
5
242
23
9
126
81
57
228
10
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyomi
Virgin
77
43
273
1, 175
56
24
268
263
97
217
36
2
18
15
74
407
15
7
82
79
24
74
6
43
19
143
513
32
10
141
113
49
100
19
1
50
188
7
5
44
70
20
35
10
1
173
44
96
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
District of Columbia—all*
•Includes National and non-National banks in the District
of Columbia which are supervised by the Comptroller of the
Currency.
176
Reserves
12
1
3
2
10
1
1
12
23
2
2
41
7
2
2
3
1
10
5
6
3
1
9
9
115
1
3
4
15
0
30
2
1
2
2
5
8
1
0
NOTE: Data may not add to totals because of rounding.
Dashes indicate amounts less than $500,000.
TABLE
B-20
Total and principal assets of National banks, by States, Dec. 31, 1965
[Dollar amounts in millions]
Number
of banks
United States
Total
assets
Cash
assets*
U.S.
GovernState
ment
and local
obliga- securities,
net
tions,
net
4,815 $219, 103 $36, 880 $31,896 $22,541
Other
bonds,
notes,
net
Loans
discounts,
net
$2, 873 $116,833
Federal
Direct
funds
lease
sold
financing
$1,433
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
District of Columbia
Florida
86
5
4
65
95
117
29
5
8
195
2,527
275
1,709
1, 149
27, 560
2,308
1,860
26
1,445
5,717
471
34
233
243
3,752
420
247
4
269
1,232
476
43
178
174
3,340
350
199
8
345
1,122
296
23
135
140
2,615
178
252
123
1, 188
154
1,072
548
16,519
1,269
1,094
12
712
2,487
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
57
2
9
417
122
101
170
81
47
21
2,858
424
711
19, 328
4,752
1,594
1,970
1,593
2,898
592
53
89
3,018
847
344
356
316
604
66
327
65
120
3,296
975
304
411
295
528
69
198
42
66
2,022
380
137
214
158
277
52
39
4
5
379
91
31
37
25
23
5
1,602
236
414
10, 036
2,268
741
915
749
1,375
259
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
50
93
97
193
37
96
50
126
3
51
2,013
5,781
8,432
4,468
339
1,060
1, 197
838
179
963
94
341
62
74
320
698
1,452
684
162
608
129
262
78
68
177
475
929
441
111
422
65
142
56
28
31
22
43
94
8
30
10
26
16
1
1,084
3,258
4,613
2,295
474
2,191
342
913
257
287
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
147
34
198
30
42
224
222
12
373
4
6,687
715
34, 234
559
9,532
3,487
2,808
14, 665
821
807
111
5,994
392
66
1,465
784
399
2,034
96
1,083
138
3,086
220
119
1,736
593
419
2,236
66
955
62
3,629
192
64
1,080
313
266
2,013
172
125
2
356
37
16
106
59
102
163
2
3,537
367
19, 088
1,058
278
4,868
1,647
1,522
7,713
470
36
20
425
5
0
93
18
0
122
2
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Virgin Islands
25
33
76
545
13
27
118
31
79
110
39
1,027
630
3,880
14,911
742
297
3,401
3,646
1,063
3,056
432
34
201
84
783
3,293
131
31
508
629
162
498
73
3
157
141
595
2, 128
55
54
536
509
305
528
96
74
50
387
1,451
98
22
322
344
102
293
27
2
26
12
30
233
2
4
48
25
13
45
3
0
526
326
1,991
7,252
438
174
1,896
2,018
452
1,608
217
20
19
0
9
89
2
6
13
14
7
9
3
0
2,520
436
562
102
10
1,338
23
District of Columbia—all f
968
4,337
661
1,719
492
476
1,953
* Cash, balances with other banks, and cash items in process
of collection,
flncludes National and non-National banks in the District
64
531
31
11
24
20
319
9
6
1
3
$271
0
1
105
5
1
0
0
0
of Columbia which are supervised by the Comptroller of the
Currency.
NOTE: Data may not add to totals because of rounding.
Dashes indicate amounts less than $500,000.
177
TABLE
B-21
Total and principal liabilities of National banks, by States, Dec. 31, 1965
[Dollar amounts in millions]
Total
liabilities
Total
deposits
Demand
deposits,
total
$193,860
Time and savings deposits,
total
Demand
deposits,
IPC*
Time
deposits,
IPC
Federal
funds
purchased
$107, 881
$85, 979
$81, 129
$75, 676
$1,497
2,278
254
1,537
1,047
24, 793
2,083
1,632
24
1,315
5, 148
1,436
135
763
699
10, 508
1,175
1,012
12
851
3,172
842
120
775
349
14, 285
908
620
12
464
1,976
1,053
107
597
514
8,663
948
890
12
714
2,213
791
76
744
327
11,949
838
555
12
445
1,675
0
2
,
2,326
260
1,574
1,059
25, 691
2,125
1,699
24
1,342
5,282
2,530
372
651
17,181
1,715
200
371
9,501
2,503
957
1, 197
982
1,826
231
815
172
280
7,680
1,678
499
570
463
801
178
1,202
146
274
7, 126
1,874
677
783
787
1,298
200
735
142
279
6,963
1,553
470
534
433
714
175
13
0
0
124
85
0
4
0
3
,
2,617
379
663
17,847
4,396
1,473
1,794
1,462
2,666
424
1,852
5,257
7,894
4, 121
885
3,973
614
1,570
452
431
1,794
4,894
7,710
3,970
869
3,831
597
1,527
444
411
1,129
3,540
3,516
2,259
603
2,627
317
1,064
237
280
665
1,355
4, 194
1,711
266
1,204
280
463
206
131
886
2,718
2, 774
1,551
396
1,729
248
747
175
228
612
1, 175
3,700
1,613
249
1,090
261
454
194
120
18
109
12
14
3
67
1
25
0
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
6,190
663
31,173
1,798
520
8,774
3,175
2,614
13,332
766
5,984
650
28, 762
1,742
508
8,550
3,097
2,548
12, 874
710
3,066
404
16,089
1, 116
261
4,522
2,098
1, 149
6,295
267
2,918
246
12,673
626
247
4,028
999
1,399
6,579
442
2,551
307
11, 199
863
221
3,532
1,528
939
5, 183
224
2,819
211
10,314
506
235
3,776
936
1,155
5,927
390
23
1
550
5
1
6
15
0
76
37
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Virgin Islands
946
585
3,585
13,713
685
273
3, 123
3,377
964
2,834
395
32
904
574
3,466
13,315
671
266
3,047
3,284
944
2,770
387
30
743
307
2,097
8,532
319
100
1,593
1,823
538
1,521
213
590
244
1,361
6,028
230
86
1,290
1,472
411
1, 181
153
147
244
1,246
3,939
277
162
1,360
1,442
402
1, 145
156
12
0
0
31
192
5
9
161
268
1,369
4,783
351
166
1,454
1,460
406
1,249
174
21
2,331
2,281
1,459
822
1,264
794
$201, 669
United States
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
District of Columbia
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
District of Columbia—allf
,
,
,
,
,
,
,
,
,
4, 181
1,456
1,767
1,444
2,627
409
*IPC deposits are those of individuals, partnerships, and
corporations.
•(•Includes National and non National banks in the District
178
0
38
7
0
0
2
19
3
6
1
0
0
0
of Columbia which are supervised by the Comptroller of the
Currency.
NOTE: Data may not add to totals because of rounding.
Dashes indicate amounts less than $500,000.
TABLE
B-22
Capital accounts of National banks, by States, Dec. 31, 1965
[Dollar amounts in millions]
United States.
Total capital accounts
Debentures
$17,434
$1, 134
Preferred
stock
$29
Common
stock
Surplus
Undivided
profits
Reserves
$4, 937
$7, 967
$2, 903
$463
64
5
30
28
500
59
44
1
29
167
83
5
57
38
817
81
85
1
54
181
42
5
19
21
395
38
21
12
1
3
3
11
1
1
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
District of Columbia.
Florida
201
15
135
90
1,868
183
161
2
103
435
Georgia...
Hawaii. . .
Idaho
Illinois....
Indiana. ..
Iowa
Kansas. . .
Kentucky.
Louisiana.
Maine....
241
46
48
1,481
356
121
175
132
231
44
37
12
0
11
13
0
54
9
17
515
86
32
52
31
53
17
96
14
24
691
175
55
79
72
132
15
29
10
6
218
73
32
42
26
43
11
25
2
1
46
8
2
2
3
1
1
Maryland
Massachusetts. . .
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire.
161
523
539
347
83
365
47
149
40
46
2
10
40
14
6
26
0
3
0
0
45
145
140
116
22
103
17
41
17
9
79
284
242
145
54
154
17
60
15
25
30
78
100
67
1
77
12
40
5
9
5
6
13
5
New Jersey
New Mexico. . . .
New York
North Carolina.
North Dakota. .
Ohio
Oklahoma
Oregon
Pennsylvania. . .
Rhode Island. . .
496
52
3,061
155
39
759
312
193
1,333
56
27
0
584
15
0
24
18
0
29
0
141
19
789
38
13
216
86
61
298
15
242
19
, 190
78
16
392
122
71
763
30
75
6
310
23
10
123
82
57
225
11
11
8
168
1
1
3
4
5
16
0
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Virgin Islands
81
45
295
1, 198
57
24
278
269
100
222
37
2
20
15
75
412
19
7
86
79
24
74
6
46
20
148
521
30
10
146
118
52
102
19
1
13
9
53
190
7
5
44
71
19
38
10
1
7
36
1
1
2
2
5
8
1
0
District of Columbia—all*.
189
26
1
145
4
11
0
0
20
13
*Includes National and non-National banks in the District
of Columbia which are supervised by the Comptroller of the
Currency.
19
54
6
1
4
3
2
44
N O T E : Data may not add to totals because of rounding.
Dashes indicate amounts less than $500,000.
179
TABLE
B-23
Loans and discounts of National banks, by States, Dec. 31, 1965
[Dollar amounts in millions]
Loans
and discounts,
net
$2,441 $119,275 $27, 878
Loans to
purchase Loans to
or carry farmers
securities
Commercial and
industrial
loans
Personal
loans to
individuals
Other
loans
$9, 123
$3, 888
$4, 068
$44, 536
$26,463
$3, 320
193
63
35
44
391
60
5
11
8
293
20
22
0
12
43
66
283
125
5,405
272
342
5
240
501
1
54
20
1, 165
114
32
0
106
142
1
13
11
194
23
8
0
12
76
55
560
175
3
40
259
170
3,258
326
341
4
127
821
3
4
6
334
17
40
49
297
168
5,897
362
333
2
222
892
434
1,607
236
414
10 036
2,268
741
915
749
1,375
259
25
2
7
295
40
15
13
13
22
5
1,627
238
421
10 331
2,309
756
928
762
1,396
264
293
100
145
1,617
718
198
131
200
186
81
147
6
14
1 227
148
29
55
48
120
12
17
4
8
577
57
12
11
8
60
2
22
5
63
258
54
160
224
47
19
7
585
56
84
4 674
602
177
287
213
630
78
536
56
101
1,691
669
164
213
231
346
78
26
11
5
286
61
16
7
15
35
5
1 084
3,258
4 613
2,295
474
2 191
17
81
83
32
11
32
1, 102
3,338
4,696
2,327
485
2,223
310
475
1,658
578
80
431
82
302
338
214
22
241
32
48
123
75
15
78
19
6
36
120
28
85
333
1,658
1, 179
810
186
778
298
747
1,248
474
133
564
27
103
114
56
22
48
342
913
7
16
2
30
69
311
$116,833
1 188
154
1 072
548
16,519
1,269
1,094
12
712
2,487
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
....
Loans to
financial
institutions
Loans
and discounts,
gross
1,219
159
1,083
556
16,812
1,289
1, 116
12
724
2,529
United States
Alabama
Alaska
Arizona
. .
Arkansas
California
Colorado
Connecticut.
Delaware
District of Columbia
Florida
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire.
Loans
secured
by real
estate
Reserves
257
287
31
18
59
5
4
12
42
79
82
246
94
176
3
24
1
835
121
9,811
1,001
113
2,523
80
7
18
458
359
349
929
94
109
4
34
258
291
92
68
11
18
7
5
3,621
378
19, 608
1 077
286
4,961
1,672
1 540
7,873
476
1,469
75
3,270
139
15
1,998
84
6
1,313
163
41
16
479
22
156
104
2,860
130
325
2,162
228
1,753
70
16
359
536
337
2,032
7,392
444
176
1,924
2,058
463
1 647
221
21
73
86
287
755
171
79
538
502
162
26
8
155
504
36
11
105
54
421
20
8
45
121
6
175
72
759
3,324
126
35
493
720
97
215
61
688
1,735
76
49
702
439
170
21
4
36
242
8
3
552
87
185
15
16
1
52
412
9
2
25
30
7
109
30
40
450
376
64
12
2
0
2
0
40
0
65
6
47
2
1,354
394
202
29
1
352
342
3,537
367
19 088
1 058
278
4,868
1 647
1 522
7,713
470
84
11
521
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Virgin Islands
526
326
1,991
7,252
438
174
1 896
2,018
452
1 608
217
20
10
11
41
140
6
2
28
40
10
District of Columbia—all*.
1,338
15
19
7
93
25
17
160
6
39
3
4
301
111
92
1,475
275
119
394
•Includes National and non-National banks in the District
of Columbia which are supervised by the Comptroller of the
Currency.
58
2
5
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
180
175
2
143
28
14
64
68
139
76
74
90
61
1,238
670
596
68
102
59
1,547
383
5
615
23
3
190
67
26
34
61
6
90
1
35
NOTE: Data may not add to totals because of rounding.
Dashes indicate amounts of less than $500,000.
TABLE
B-24
Bank trust assets and income, by States, calendar 1965
Trust department income
Accounts where National banks exercise
investment responsibility*
Number of
banks having
accounts
Employee
benefit
accounts
(millions)
Other trust
accounts
(millions)
Total trust
accounts
(millions)
National banks
(thousands)
All insured
commercial National banks
banks
as a percent
(thousands)
of total
$28, 568
$60, 952
$89, 520
$360, 090
$689, 602
52.2
118
4
21
12
853
10
95
242
735
6
430
224
5,831
1, 161
1,474
451
236
7,635
1,256
1,716
205
196
1,019
2,052
1,224
2,248
3,288
85
2,665
738
41,613
6, 111
7,610
0
6,384
10, 165
3,517
85
3, 170
992
58, 773
6,454
17,119
8,422
6,384
11,787
93.5
100.0
84.2
74.4
70.8
94.7
44.5
0
100.0
86.2
24
3
135
88
39
37
51
18
16
153
9
4,774
243
37
23
25
64
21
911
36
4,647
1,752
328
325
254
193
201
1,064
45
9,421
1,995
365
348
279
257
222
5,092
317
39, 762
7,120
1,804
1,505
1,705
1,277
1,173
8,783
357
62, 171
9,229
3, 135
1,645
6,092
1,498
1,982
58.0
88.8
64.0
77.2
57.5
91.5
28.0
85.2
59.2
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
10
56
30
19
18
28
11
17
2
21
71
901
2,485
554
21
581
3
57
5
4
469
2, 194
1,591
1,396
142
1,942
43
417
118
120
540
3,095
4,076
1,950
163
2,523
46
474
123
124
2,519
14, 141
11,567
9,381
823
9,053
212
2,445
974
496
3,925
26,431
20, 301
9,526
964
11,409
585
2,487
1,216
596
64.2
53.5
60.0
98.5
85.4
79.3
36.2
98.3
80. 1
83.2
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
81
14
82
17
6
50
34
2
153
2
106
8
9,045
112
6
972
141
128
3,726
73
1, 105
178
8,524
561
39
3, 137
467
522
8,233
288
1,211
185
17,569
673
45
4,109
608
650
11,959
361
9,307
824
59, 078
2,867
359
13,496
2,617
3,832
35, 298
1,638
16,971
859
217,468
7,667
359
29, 265
2,624
3,998
63, 585
5,224
54.8
95.9
27.2
37.4
100.0
46. 1
99.7
95.8
55.5
31.4
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
9
9
25
129
2
12
54
63
9
86
822
49
4
121
201
13
153
2
297
50
1,397
2,962
96
36
1,277
989
250
501
33
360
59
1,483
3,784
145
41
1,398
1,190
263
654
35
1,426
461
4,240
1,621
490
4,914
18, 144
1,860
571
8,172
6,838
2,253
7,420
264
88.0
94. 1
86.3
92.6
44.6
39. 1
72.8
90.8
54.3
42.3
95.5
United States. ..
27
4
2
26
17
27
13
1
6
65
1,804
Georgia
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Lousiana
Maine
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
District of Columbiaf.
Florida
10
32
32
12
*As of December 1965.
•{•Includes National and non-National banks in the District
of Columbia which are supervised by the Comptroller of the
Currency.
16,803
830
223
5,946
6,206
1,224
3, 135
252
NOTE: Dashes indicate amounts less than $500,000.
181
TABLE
B-25
Common trust funds, by States, 1964-65*
Number of banks
with common
trustfunds
1964
418
Total United States..
5
0
5
3
11
11
10
3
4
15
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
District of Columbia
Florida
1965
464
Number of common
trustfunds
1964
Number of account
participations
1965
Total assets of
funds {millions)
1964
Percentchange
in assets,
1964-65
784
1,016
227, 338
$5, 819. 7
$7, 529. 1
29.4
0
11
3
27
22
15
4
6
24
10
0
11
4
40
25
20
7
7
33
1,373
0
1,889
675
17,693
5,315
4,070
2,200
2,227
2,715
1,504
0
2, 145
791
21, 923
5,892
4,910
2,733
2,532
3,327
$15.8
0
50.8
7.8
375.3
134.7
126. 1
85.0
68.5
52.5
$18. 1
0
66. 1
9.6
511.4
157.6
177.8
75.2
83.5
70.9
14.6
0
30.1
23.1
36.3
17.0
41.0
—11.5
21.9
35.0
19
7
2
30
27
4
7
9
1
16
4,277
1,063
71
6,832
1,676
170
375
1,906
171
2,200
4,786
1,214
214
8, 154
2,967
432
451
2,350
191
2,082
92.1
19.6
.7
274.9
29.3
1.6
6.2
28.8
2.7
51.3
115.1
22.6
2.3
366.7
80.4
12.2
8.8
43.6
3.4
61.1
24.5
15.3
228.6
33.4
174.4
662.5
41.9
51.4
25.9
19.1
271,201
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
10
9
2
3
6
1
6
12
7
1
26
9
2
6
8
1
12
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
6
19
13
8
2
9
2
3
1
4
14
36
26
20
2
21
4
5
2
r6
16
43
40
22
4
25
4
5
3
6
5,843
10, 877
4,901
3,902
527
8,815
426
858
297
r297
6,348
11,974
7,728
6,200
686
9,922
514
1,097
385
312
132.3
435.3
96.0
69.3
6.8
225.2
4.9
20.1
5. 1
rl0.4
171.3
495.0
188.8
104.5
11.5
295.2
6.0
25.2
6.6
11.1
29.5
13.7
96.7
50.8
69.1
31. 1
22.4
25.4
29.4
6.7
13
2
23
9
1
22
4
4
63
3
25
3
73
15
3
43
10
29
6
81
19
6
70
16
12
130
10
7,052
795
24, 351
6,663
255
7,300
838
3,956
53, 114
1,361
6,036
1,016
26, 541
6,573
409
9,906
1,086
4,705
59, 861
1,681
87.8
13.5
1,152.4
129.7
2.2
207.5
21.2
74.2
1,154.2
35. 1
106. 1
18.8
1,414.8
144.2
4. 1
314. 1
27. 1
91.3
1,422. 3
42.4
20.8
39.3
22.8
11.2
86.4
51.4
27.8
23.0
23.2
20.8
6
3
,
New Jersey
,
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
See footnotes at end of table.
182
10
105
TABLE B-25—Continued
Common trust funds, by States, 1964-65
Number of banks
with common
trust funds
1964
South Carolina
South Dakota
Tennessee . .
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
3
5
9
22
r3
6
21
5
7
12
0
1965
3
5
10
26
4
7
21
7
8
15
0
Number of common
trust funds
1964
7
9
12
30
r5
9
37
12
7
23
0
* These figures were derived from a survey of banks and
trust companies operating common trust funds. Data are
for the last valuation date in 1964 and 1965.
1965
6
9
14
49
7
9
40
17
9
30
0
Number of account
participations
1964
1,551
529
2,069
5, 114
rl, 160
625
6,751
4 268
865
5,080
0
1965
1,752
622
2,397
6,893
1,354
6,820
7,305
5 111
1, 178
6, 191
0
Total assets of
funds {millions)
1964
$17.7
4.4
r38.4
107.9
r9. 8
7.2
140.7
84.9
11.7
88.2
0
1965
$21.4
5.8
46.9
242.8
13.6
7.7
173.4
109.6
15.8
106.3
0
Percent
change
in assets,
1964-65
20.9
31.8
22. 1
125.0
38.8
6.9
23.2
24 1
35.0
20.5
0
r Revised
NOTE: Data may not add to totals because of rounding
183
TABLE
B-26
Income and expenses of National banks, by States, year ended Dec. 31, 1965
[Dollar amounts in thousands]
United
States
Alabama
Number of banks 1
4,815
Current operating revenue:
Interest and dividends on—
$1,210, 140 $17.', 183
U.S. Government obligations
755, 865 9, 167
Other securities
6, 376, 568 72, 367
Interest and discount on loans
Service charges and other fees on banks* loans . 117,584 1,048
490, 103 7,868
Service charges on deposit accounts
Other service charges, commissions, fees and
159,247 1,438
collection and exchange charges
356, 173 3,288
Trust department
239, 544 1,554
Other current operating revenue
9, 705,224 113,913
Total current operating revenue
Current operating expenses:
Salaries and wages: 2
743, 378 10,331
Officers
1, 368, 757 16, 685
Employees other than officers
Number of officers
Number of employees other than officers
Officer and employee benefits—pensions,
hospitalization, social security, insurance,
etc
Fees paid to directors and members of executive, discount and other committees
Interest on time and savings deposits
Interest and discount on borrowed money. . .
Net occupancy expense of bank premises
Furniture and equipment—depreciation,
rents, servicing, uncapitalized costs, etc. . . .
Other operating expenses
Total current operating expenses
Net current operating earnings
67, 149
970
326, 673 4,767
308, 352
3,268
Alaska
Arizona
Arkansas
65
$2, 205 $6, 485
1,293 5,468
10,610 65, 878
963 2,957
1,368 6, 990
559
85
290
1,818
2,668
1,427
California
Colorado
Connecticut
21,040
41,613
39, 575
530
2,992
5,245
6,437
529
1,850
1,498
1, 837
6, 111
3, 031
3,040
4,349
Georgia Haw i
57
$247 $12, 244 $40, 049 $13, 131 $2, 397
29
1,890 17,586 6,799
1,294
793 36, 716 142, 234 94, 273 14,313
40
1, 158 3,877 2,690
710
53 3,383 16,093 10,824
984
1,415
7, 610
1,484
105, 953 11, 169 9,318
218, 557 16,818 17, 354
10, 150 1,025
771
47, 289 4,013 4,008
41, 830
Florida
195
17,373 93, 691 48, 678 [,424,094 113, 378 95, 380
1,815 7, 653
3, 011 16, 030
122
740
592 3,985
District
of Columbia
95
$6, 290 $128,811 $14,221 $6, 982
93, 372 5,861
4,870
7,091
966, 041 72, 851 63, 280
32,231
30, 357 1,485
85
1, 187
103, 285 7,981
2,898
6, 331
912
738
654
Delaware
659 4,232 4,624
2,467 10, 165 5,092
1, 166 5, 740 1,766
358
0
438
1, 194 59, 683 239, 976139, 199 20, 494
141
244
20
78
4,916 22, 204 12,058
8,573 38, 113 22, 739
362
2,104 1,037
1,864 10,197 5,625
1,703
3,031
140
682
6,010
\, 102
526
36, 372
3, 002, 427 29, 066
25, 920
111
409, 065 3, 779
29
82
417
3, 739 28, 732 11,329
11
116
87
817 4,692 2, 123
921
704
469
533, 922 32, 891 20, 612
1,499
248
110
62, 879 6,878 4,852
13
574
303
1,447
329 15,452 63, 666 29,311
789
711
1
23
67 2,688 10, 785 8,035
62
6, 086
0
895
244, 743 3,346
1, 084, 661 13, 620
605 3, 180 1,476
1,854 11,254 6,265
34, 963 4, 314 3,609
124, 508 13, 682 11,435
52
210
1,692 9,216 4,421
6,453 32, 379 20, 842
729
2, 379
7, 223, 675 80, 732 12,411 74, 731 34, 877 1, 125, 032 89, 744 72, 108
2,481, 549 33, 181
4, 962 18,960 13,801
299, 062 23, 634 23, 272
22
1, 199 6,973
1, 079 41,299
115 18, 384
104, 701 15, 987
34, 498
4,507
Recoveries, transfers from valuation reserves and
profits:
On securities:
Profits and securites sold or redeemed. .
Recoveries
Transfers from valuation reserves
On loans:
Recoveries
....
Transfers from valuation reserves
All other
50, 401
1, 535
41, 128
1,082
1
7
369
0
0
649
64
1, 819
325
17
2
7,880
21
7,026
538
70
181
298
0
300
0
0
0
27
0
0
582
39
108
358
48
15
0
0
8, 950
35, 368
56, 673
148
118
230
0
0
36
3
0
802
111
7
109
492
25
3, 128
251
15
1, 535
5
199
1,844
16
0
3
77
0
449
176
747
1,995
11
59
776
0
0
197
Total recoveries, transfers from valuation
reserves and profits
194, 055
1, 586
405
3, 337
571
18, 572
2, 590
2, 646
19
553
3,647
1,253
212
Losses, chargeoffs, and transfers to valuation
reserves:
On securities:
Losses on securities sold
Chargeoffs on securities not sold
Transfers to valuation reserves
On loans:
Losses and chargeoffs
Transfers from valuation reserves
All other
49, 104
4,017
41,058
180
29
100
14
0
6
81
0
686
94
50
125
2,097
3
5, 550
244
70
231
52
0
115
2
1
0
421
13
0
915
201
22
319
13
13
142
0
0
16, 557
483, 442
82, 152
228
5, 174
769
0
624
132
0
6,494
488
400
1, 911
464
939
57, 014
11, 525
1, 251
4, 771
828
4, 762
1,989
44
0
7
123
1, 818
2, 866 14, 994
406
2,209
45
8, 467
1,689
0
420
151
676, 330
7,749
3, 829 20, 159
Total losses, chargeoffs, and transfers to
valuation reserves
Net income before related taxes
Taxes on net income:
Federal
State
Total taxes on net income
Net income before dividends
Gash dividends declared:
On common stock
On preferred stock
Total cash dividends declared
Net income after dividends
Capital accounts
3
Ratios:
Net income before dividends to capital accounts
(percent)
Total current operating expenses to total current
operating revenue (percent)
.
. . . .
See footnotes at end of table.
3,044
77, 128
7,395
6,923
54
14, 548 11, 328
240, 506
18, 829
18, 995
80
3, 939
280
2, 887
0
65, 364
24, 190
5, 239
1,097
3, 796
1, 751
33
3
6,452
0
12, 625
0
1,577
4, 219
2, 887
89, 554
3, 014
10, 329
8, 441
391
0
5,075
0
2, 705
0
93, 703
0
6,480
776
1, 999, 274 28, 287
4, 591
552, 132
59, 914
7, 758
1,098
1,573
4
612, 046
8, 856
1, 387, 228 19,431
10, 546
713
15, 108 37, 892 25, 205
4, 006
8, 128
0
1, 097
188
6, 336
5, 547
36
6,452
12, 625
8, 128
1, 285
150, 952 12,493
13,448
44
8, 656 25, 267
17,077
2, 721
7,256
0
6, 733
0
34
0
4,499
0
11, 744
10
7, 990
0
1,375
0
681, 802
1,453
8,020
0
683, 255
8,020
391
5, 075
2, 705
93, 703
7, 256
6, 733
34
4,499
11, 754
7, 990
1,375
703, 973 11,411
2, 623
5, 254
5, 736
57, 249
5, 237
6, 715
10
4, 157
13, 513
9,087
1, 346
16, 111, 704 194, 091 14, 252 132, 658 86, 915 1, 829, 260 179,372 147, 520
2, 079 101, 288 420, 085 232, 601 40, 483
8. 61
10.01
21. 15
7. 79
9. 71
8. 25
6.96
9. 12
2. 12
8.55
6. 01
7.34
6. 72
74. 43
70. 87
71.44
79. 76
71. 65
79. 00
79. 15
75.60
90. 37
69. 20
77. 33
75.22
78.01
TABLE B-26—Continued
Income and expenses of National banks, by States, year ended Dec. 31, 1965
[Dollar amounts in thousands]
Idaho
Illinois
Iowa
Number of banks *
170
Current operating- revenue:
Interest and dividends on—
U.S. Government obligations
Other securities
Interest and discount on loans
Service charges and other fees on banks' loans. .
Service charges on deposit accounts
Other service charges, commissions, fees and
collection and exchange charges
Trust department
Other current operating revenue
Total current operating revenue
Total current operating expenses
81
Louisiana
47
Adary- Ma:
21
Michi-
Mississippi
50
$4,446 $124, 050 $36, 604 $11, 432 $16, 059 $11, 330 $19, 728 $2, 628 $13, 124 $24, 961 $56, 377 $27, 249 $5, 730
2,216
76,371 13,123 4,669 7,061 5,406 8,636 1,466 5,590 12,933 30,217 15, 305 4, 131
24, 531 496,049 128,572 41,677 51,509 42,043 73,862 15, 822 59, 040 177, 450 245, 342 124,876 27, 629
5,279 1,853
434
377
660
67f
991
28
243 2, 291 2,885 3, 180 1, 768
22,360 10,115 3,477 5,063 3,143 6,32:
3, 138
1,362 5,389 15,038 14,579 9,604 3,030
526
31
38:
3,458
5,210
3L~
1,475
Officer and employee benefits—pensions hospitalization, social security, insurance, etc
Fees paid to directors and members of executive,
discount and other committees
Interest on time and savings deposits
Interest and discount on borrowed money
Net occupancy expense of bank premises
Furniture and equipment—depreciation, rents,
servicing, uncapitalized costs, etc
Other operating expenses
Net current operating earnings
Kentucky
9,686
39, 76r
19, 177
3,837
7, 120
4, 84f
1,254
1,804
1, 159
1,27:
1,505
1, 131
509
1, 705
893
2,227
1,27^
2,733
275
1, 173
572
1,210 10, 941 6, 124 7, 763
2,519 14, 141 11,567 9,381
1,459 10,841 5,837 2,339
1,351
823
620
36, 550 792, 734 206, 066 65, 906 83, 977 65,689 115,457 23, 541 90, 62! 269, 190373, 223198,285 43, 342
Current operating expenses:
Salaries and wages: 2
Officers
Employees other than officers
JVumbet of officers
Number of employees other than officers
Kansas
51,247 18, 375 7, 731 10, 349 6,393 9, 162 2, 133 6,895
032 19,407 17, 129 3, 959
96, 853 29,811 8,817 9,753 9,242 16, 725 3, 790 14,483
407 54, 582 26, 042 5, 702
3,987 1,634
733 1,017
700
772
233
678
609 1,551 1,589
369
21, 675 7,549 2,450 2,689 2,554 4,217 1,112 3,716 10,369 12, 968 6,593 1,564
23, 373 6,358 1, 796 2, 128 1,990 3,609
574 3,007 9,701 12, 346 6,412 1,439
82
3,012 1,074
728
505
412
905
476
918
301
920
199
602
10, 085 272, 912 50,217 15, 606 18, 961 15, 074 26, 239 5,409 20, 398 46, 052 147, 394 56, 305 9,045
161
244
0
2,389
281
813
691
720
112
42
169
600 1,420
1,019
24, 627 9,064 2,843 3,214 2,939 5, 112 1,236 4,642 13,307 15, 759 8, 133 1,297
1,250
992
3,566
16,453 6,059 2, 155 2,487
77, 537 29, 138 8,471 8,997
415 5,667 1,454
1,859 3,270
675 2,657 7,579
7,895 16, 561 2,990 12, 728 34, 681 40, 240 23, 718 6,361
, 25, 662 568, 403 150,257 48, 112 56, 861 46, 009 82, 000 17, 048 65, 455179, 277300, 483 145, 124 30, 249
10, 888 224,331 55, 809 17,794 27, 116 19, 680 33, 457
6,493 25, 167 89,913 72, 740 53, 161 13,093
Recoveries, transfers from valuation reserves and
profits:
O n securities:
Profits and securities sold or redeemed
Recoveries....
Transfers from valuation reserves
O n loans:
Recoveries
Transfers from valuation reserves
All other
Total recoveries, transfers
reserves and profits
from
Total losses, chargeoffs, and transfers to valuation reserves
157
40
177
8
13
955
61
77
330
210
320
157
57
698
646
268
2, 250
603
55
1,445
925
19
4,830
270
10
54
379
106
63
739
11
178
0
82
333
5 511
4,274
140
275
3,270
24
289
220
260
128
545
1,277
277
99
11
75
195
281
2,803 11,385
120
23, 152
9,459
867
1,481
2,784
2,354
186
748
396
0
6,883
476
7, 714
2,448
93
3,666
317
57
20
190
131
131
175
97
616
203
71
591
368
11
60
1, 170
22
360
71C
82
659
31,204
6,358
218
10,013
3, 399
50
1,817
863
709
3,406
1,036
177
3, 394
967
307
5,871
937
53, 294
19,837
3, 124
5,603
5,426
7, 980
1, 195
N e t income before related taxes
9,813
Taxes on net income:
Federal
State
3,263
746
T o t a l taxes on net income
30
9, 126
138
3, 770
16
116
463
valuation
Losses, chargeoffs, and transfers to valuation reserves:
O n securities:
Losses on securities sold
Chargeoffs on securities not sold
Transfers to valuation reserves
O n loans:
Losses and chargeoffs
Transfers from valuation reserves
All other
1, 114
40
667
12
194, 189 45,431
59, 747
0
14, 446
0
15, 537 22, 994
4,630
0
6,448
589
17,038 27, 831
5,557
0
9, 250
0
5,557
9,250
23
74
306
2
36
49
707
45
556
5, 761 13, 181
4, 085
994
1,465
48
5,537
1,212
255
14
159
34
745
21
1,073
205
148
96
64
5,600 12, 106 18,232
1, 109 5,881 5,214
282
9,666
591
45
2, 758
625
1, 738
3,986
26
1,339
8,357 23, 486 30, 560 12, 020
4,366
4, 941 17, 558 72, 188 55, 361 45, 226
9, 721
1,456
0
5,438 24, 178 10, 308 12, 103
0 5,359
0 3,620
3, 106
0
1,456
5,438 29, 537 10, 308 15, 723
3, 106
3,485 12, 120 42, 651 45, 053 29, 503
6, 615
6,434 24, 794 19, 202 14, 193
0
0
0
167
3,010
0
4,009
59, 747
14, 446
4,630
7,037
Net income before dividends
5,804
134,442
30, 985
10, 907
15, 957
Cash dividends declared:
O n common stock
O n preferred stock
2,708
0
54, 035
0
11,343
0
3,976
0
5,752
22
4,567
0
6, 981
145
4,567
7, 126
1,511
6,434 24, 794 19, 369 14, 193
3,010
6,914 11,455
1, 974
5,686 17,857 25, 684 15, 310
3, 605
Total cash dividends declared
Net income after dividends
Capital accounts
3
Ratios:
Net income before dividends to capital accounts
(percent)
Total current operating expenses to total current
operating revenue (percent)
See footnotes at end of table.
2, 708
54, 035
11, 343
3, 976
5, 774
3, 096
80, 407
19,642
6, 931
10, 183
11,481 18,581
1,511
0
46, 338 , 435, 771 341, 978 117,208 169, 714 127, 860 225, 983 43, 220 157, 585 509, 659 519, 796 329, 864 60, 844
12 53
9 36
9 06
9. 31
9. 40
8. 98
8. 22
8.06
7. 69
8. 37
8. 67
8. 94
10. 87
70.21
71. 70
72.92
73.00
67.71
70.04
71.02
72.42
72. 23
66.60
80.51
73. 19
69.79
TABLE B-26—Continued
Income and expenses of National banks, by States, year ended Dec. 31, 1965
[Dollar amounts in thousands]
Missouri
96
Montana
50
New
Nebraska Nevada Hampshire
126
3
51
New
New
Jersey Mexico
147
34
New
Tork
198
North
Carolina
30
North
Dakota
42
Ohio
224
Oklahoma
222
Oregon
12
Current operating revenue:
Interest dividends on—
U.S. Government obligations . . . . $22, 084 $4, 526 $10,570 $3, 005 $2,417 $40, 614 $5, 335 $120, 105 $8, 722 $4, 662 $63, 491 $23, 474 $13,003
919 30, 189 1, 501 123, 632 6, 123 2,210 32, 987 9,478 9,372
13, 041 2,063 5,238 1,679
Other securities
111,761 20, 820 51, 194 16, 657 16,811 193,442 23, 776 950, 167 59, 185 16,519 262, 944 95, 874 88, 780
Interest and discount on loans
Service charges and other fees on
530
1,661
568
14, 397 3, 108
318
290
887
banks* loans
168 2,428
211 3,015 1,054
44, 189 6,048 1,693 19, 930 8,652 11,643
Service charges on deposit accounts . . 4,274 2,207 3,981 1,671 2, 193 17, 883 2,667
Other service charges, commissions,
fees and collection and exchange
1,436
20, 124 3, 152
428 3, 701
336
805 4,347 1,909
921
856 1, 193
1,607
charges
824
359 13,496 2,617 3,832
59, 078 2, 867
496 9,307
974
212 2,445
9, 053
Trust department
9
0
5
2
8
9
705
692
358
7, 188 2, 331 2,521
64, 656
4,499
1,299 1, 150
Other current operating r e v e n u e . . . . 3, 724
Total current operating revenue. . . 166,431 31,572 76, 210 26,040 24, 124 302, 063 36, 247 1, 396, 348 89, 910 26, 748 407, 398 145, 389 132, 248
Current operating expenses:
Salaries and wages: 2
12, 889
Officers
Employees other than officers . . . . 23, 825
1,116
Number of officers
Number of employees other than
6,044
officers
Officer and employee benefits—pensions, hospitalization, social securi4,636
ty, insurance, etc
Fees paid to directors and members
of executive, discount and other
715
Interest on time and savings deposits. 42, 546
Interest and discount on borrowed
1,039
money
Net occupancy expense of bank prem6, 145
ises
Furniture and equipment—depreciation, rents, servicing, uncapitalized
4,203
costs, etc .
19,885
Other operating expenses
2, 363
3,895
256
3, 364
3,864
345
9,553
9,864
868
1,039
2,659
933
1,013
2,591
596
179
622
38
8,519 15,987
7,044
7, 041
35, 298
13,070
646, 599
4,556
19, 941
3,977
3,717
20, 163
141
870
165
1,750
8, 509 121, 841 35,611 47, 006
3,970
207, 397
1,495
39, 653
4,236
861
13, 509
10, 443
873
56, 269
3,039
752
10, 248
1,943
262
4,404 88, 212
8,523
2, 161
326
502, 167 20, 874
5, 603
19, 689
4,666
1,056 11, 650
249
$86,513
69, 492
409, 893
45, 176
83, 327
4,368
3, 735
5, 938
356
889
373
2, 687 29, 180 16,808 13,504
2,928 55, 806 17,665 19, 433
1,664 1,395
290 2,422
2, 655 22, 881
3,623 48, 090
285 2,003
69, 493 9,088
189,491 14, 961
840
5,306
Pennsylvania
112
473
4
1, 171
37
2, 188
446
43
996
534
65
2,344
1,065
2,958
1,230
1, 187 15, 169
1, 765
62, 844
4,320
1,253
13,939
5, 133
5,640
24, 789
745
2,644
9, 199
885
2,353
8,449
844
3,560 35, 868
1,308
5, 162
9,080 4, 134 3,500
742
2,977 51, 683 17, 612 11,635
15, 701
72, 742
Total current operating expenses. . . 115,883 23, 422 53, 891 18,408 17, 446 232, 226 27, 590 1,046,467 66, 958 20, 056 294, 523 102, 344 104, 641
475, 609
6, 692 112,875 43, 045 27, 607
170, 990
Net current operating earnings
50, 548
4,561
8, 150 22, 319
7,632
22
6, 678 69, 837
8,657
23, 361 2, 649
138,493 11, 255
349, 881 22, 952
Recoveries, transfers from valuation reserves and profits:
On securities:
Profits and securities sold or redeemed
Recoveries
Transfers from valuation reserves.
On loans:
Recoveries....
Transfers from valuation reserves.
All other
Total recoveries, transfers from
valuation reserves and profits
Losses, chargeoffs, and transfers to valuation reserves:
On securities:
Losses on securities sold
Chargeoffs on securities not sold. .
Transfers to valuation reserves. . .
On loans:
Losses and chargeoffs
Transfers from valuation reserves.
All other
Total losses, chargeoffs, and transfers to valuation reserves
1, 274
39
2, 162
82
74
500
345
148
419
176
53
100
2, 358
2
465
253
0
288
3, 795
60
1, 195
558
0
2, 781
6
66
1
0
1, 357
49
1, 744
1,523
6
21
106
0
6,542
2,247
89
1,580
86
3,491
182
577
17
1, 112
58
282
384
0
0
834
62
16
300
197
1,237
1,321
93
72
139
1, 065
1,344
6,512
10
1,315
259
12
67
286
243
4, 045
964
698
39
360
25
0
291
508
8,215
2,043
7,234
2, 362
1,636
3, 617
707
5, 580
845
13, 971
2, 153
432
8,402
2, 647
6,964
14, 682
2, 292
411
539
95
21
504
555
245
128
0
0
1, 195
109
95
198
2, 783
51
669
148
8
11
1,663
168
712
191
53
23
27
25
0
3,233
76
1,028
541
56
104
68
0
746
5, 113
221
2,866
396
11,421
1,600
220
4,085
280
91
3,715
568
0
1, 138
215
308
109
1, 248 11,564
2,472
201
85
2, 142
197
757
110,088
10, 629
21
4,598
674
16
452
685 16, 564
1,485
178
1,453
8,036
614
7
5,658
1,213
755
31, 634
3,669
5,560
10, 804
7, 692
44, 258
6, 193 98, 439 34, 888 26, 879
141,414
16,659
5,205
5,302
2, 548
1, 960 17,847
2,591
124,017
Net income before related taxes
41, 123
5, 307 18,653
8,701
5,425 57, 570
6,911
239, 835 19, 545
Taxes on net income:
Federal
State
13, 228
1,013
2,062
8
5,654
0
2, 124
0
1, 961 13, 158
0
0
2,405
0
37, 722
13, 432
6,467
409
14, 241
2,070
5,654
2, 124
1,961
13, 158
2,405
51, 154
6,876
Net income before dividends.
26, 882
3,237
12,999
6,577
3,464 44,412
4,506
188,681
12,669
Gash dividends declared:
On common stock
On preferred stock
13, 555
0
2,438
0
5, 394
5
2,480
0
1,357
0
19, 575
8
2, 194
0
106, 829
1,020
6, 679
0
13,555
2,438
5,399
2,480
1,357
19, 583
2, 194
107, 849
13, 327
799
7,600
4,097
2, 107 24, 829
2,312
80, 832
Total taxes on net income
Total cash dividends declared
Net income after dividends
Capital accounts
Ratios:
Net income before dividends to capital
accounts (percent)
Total current operating expenses to total
current operating revenue (percent) . . .
See footnotes at end of table.
931
22, 838
1,902 31,373
0
112
11,468
1,035
5,295
2,081
2,014
12, 503
7, 376
31, 825
4, 179 67, 066 22, 385 19, 503
109, 589
31,373
31, 825
0
1,835 28, 483 12,210
5
0
10
8,896
0
57, 040
5
6,679
1, 835 28, 488 12, 220
8, 896
57, 045
5,990
2,344
38, 578 10, 165 10, 607
52, 544
356, 867 43, 527 142,412 36, 877 43, 805 477, 333 50, 922 2, 205, 744 151,063 37, 638 736, 340 306, 124 185, 117 1,294,431
7.53
7.44
9. 13
17. 83
7.91
9. 30
8.85
8.55
8.39
11. 10
9. 11
7.31
10. 54
8.47
69.63
74. 19
70. 71
70. 69
72.32
76. 88
76. 12
74.94
74.47
74. 98
72.29
70. 39
79. 12
73.56
TABLE B-26—Continued
Income and expenses of National banks, by States, year ended Dec. 31, 1965
[Dollar amounts in thousands]
Rhode
Island
South
South
Carolina
25
Number of banks *
33
Tennessee
76
Current operating revenue:
Interest and dividends on—
U.S. Government obligations
$2, 675 $5, 972 $5, 402 $22, 511
2, 728
Other securities
5, 072
1, 856 11, 968
24, 687 30, 324 20, 123 112, 529
Interest and discount on loans
Service charges and other fees on
1, 384
239
453
212
banks' loans
1,977
6,336
Service charges on deposit accounts. . . 1, 683 3,644
Other service charges, commissions,
fees and collection and exchange
1,417
551
1, 160 2, 692
charges
461 4, 240
1,638 1,426
Trust department
1,553
576
426
641
Other current operating revenue
Total current operating revenue. . . .
Current operating expenses:
Salaries and wages: 2
Officers
Employees other than officers
Number of officers
Number of employees other than officers
Officer and employee benefits—pensions hospitalization, social security,
insurance, etc
Fees paid to directors and members of
executive, discount and other committees
Interest on time and savings deposits. .
Interest and discount on borrowed
money
Net occupancy expense of bank premises
Furniture and equipment—depreciation, rents, servicing, uncapitalized
costs, etc
Other operating expenses
37, 400 46, 326 31,617 163,213
2, 121
4,538
187
5,566
9,385
555
3,533 12, 302
3,689 21, 547
1,190
362
1,263
2,714
1,033
5,758
1,737
1,977
1,073
4,454
111
16, 165
272
3,649
524
146
8,893 49, 077
48
19
459
1, 078
1,940
1,247
5,984
828
3,381
1,902
6,267
906 4,768
3,099 19, 719
47
Total current operating expenses. . . . 30, 006 31,006 22, 605 118,834
Net current operating earnings
7,394 15, 320
9,012 44, 379
Texas
Utah
545
Vermont
27
Virginia
118
Washington
31
West
WisVirginia consin
79
110
Wyoming
39
>, 232 $3, 415
$82, 348 $2, 203 $1, 881 $19, 366 $20, 398 $10, 960 $20,
697 10,685 11,888 2,824 "9, 287
910
2,619
45, 536
402, 344 25,300 10,441 108,455 118, 133 27, 728 83, 080 14, 195
6, 284
23, 656
932
2,466
138
970
2,324
8, 722
9, 175
16, 803
12, 904
937
830
472
116
223
276
2,361
5,946
2,433
2,803
15,269
3,727
6, 206
3,690
269
1,397
687
5, 187
247
1,369
602
1,224
856
2,088
3, 135
2,977
612
252
176
599, 050 35, 759 14, 742160, 292 182, 11445,860 126,673 21, 176
54, 214
68, 089
5,089
2,295
4, 092
243
17, 442
1,144
15,294
890
3, 154
131
163, 564 12, 124
3,005
142
26, 430
1, 030
14, 467
84, 620
1,004
3,646
1,343 14, 435 16, 324
2, 040 21, 999 30, 709
163 1,495 1,575
6,484
403
4,511
6,963
6,540
4, 177 11,380
5, 702 17,056
955
427
1,523
1,073
2,364
2, 829
226
$29: $20, 361
3, 176
27
1,417 70, 206
156
29
3,816
151
278
475
740
1, 100
5,634 46, 279 52, 872 11,923 38, 115
1,611
6,608
1, 190
6,384
1, 808
2, 040 111,344
172
363
13
8, 590
16, 130
623
3,552
4,777
526
209
6,056
2, 350
9
604
574
27, 395
123
6
412
29
23
792
94
22
626
5,525
8,558
1,420
5,238
828
42
5, 244
309 4,219 5,421
1,353 18, 470 17,337
962
5,210
3,609
14, 101
738
2,480
40
229
2,991
12, 564
432, 837 25, 354 11,865 116,950138,068 30, 965 94, 847 16, 124
166, 213 10, 405
Virgin District oj
Islands Columbia
—all*
2,877 43, 342 44, 046 14, 895 31, 826
5,052
1, 537 75, 961
503
35, 383
Losses, chargeoffs, and transfers to valuation reserves:
On securities:
Losses on securities sold
Chargeoffs on securities not sold. . .
Transfers to valuation reserves....
On loans:
Losses and chargeoffs
Transfers from valuation reserves. .
All other
..
. .
Total losses, chargeoffs, and transfers
to valuation reserves
Net income before related taxes
Taxes on net income:
Federal
State
1,343
0
0
39
0
0
3, 111
44
405
1995
37
345
27
0
0
78
1
25
353
3
516
739
31
850
297
3
37
965
4
75
137
1
86
282
0
0
8
200
55
16
0
268
31
4
83
44
45
284
1, 783
1,008
2, 144
44
0
64
34
10
85
143
1,404
349
42
417
628
97
289
243
25
68
574
79
3
45
OOCO
Total recoveries, transfers from valuation reserves and profits
89
0
0
OOO
Recoveries, transfers from valuation reserves and profits:
On securities:
Profits and securities sold or
redeemed
Recoveries
Transfers from valuation reserves. .
On loans:
Recoveries
Transfers from valuation reserves. .
All other
116
27
573
352
1,627
157
3, 933
7, 312
135
233
2, 768
2, 707
966
1,711
351
8
998
16
0
201
32
17
25
36
7
6
2, 183
311
250
2,575
362
3,083
451
0
0
129
7
25
1, 022
40
421
1, 362
8
502
204
72
17
719
51
95
24
9
69
0
0
0
502
14
0
0
575
265
18
1,238
285
47
558
84
81
5,685
861
2, 928
27, 526
4,012
122
1, 278
115
55
474
84
575
8,445
1, 350
71
6,657
1,763
143
1, 700
238
72
2, 728
1, 087
141
607
84
0
48
5
260
4, 018
662
1,057
1,615
738
9,371
40, 486
1,966
774
11,853 10,363
2,374
6,689 15,332
8,431
38, 941
133,039
8,574
2,336
671
84
598
399
5,531
301
3, 114 13,378
253
0
41, 808
0
2, 677
161
4, 752
934
53
5, 456
34, 257 36, 390 13,487 28, 785
4,469
458
30, 925
8,044
1, 701
1,625
0
257
0
13, 294
0
11, 286 12,882
0
0
4, 796
0
11,286
997
5,832
3, 367
13, 378
41, 808
2,838
755
12, 882
4, 796
9, 745
1,625
257
13,294
Net income before dividends
5,692
9,500
5,064 25, 563
91, 231
5, 736
1,581
22,971 23, 508
8,691
19,040
2,844
201
17,631
Cash dividends declared:
On common stock
On preferred stock
2,655
0
3, 713
1
2,078
0
9,231
19
47, 632
0
3,025
0
745
36
11, 395 11, 184
0
0
3,039
0
8,806
0
1,303
0
0
0
8,338
0
2,655
3, 714
2,078
9,250
47, 632
3,025
781
11, 395 11, 184
3,039
8, 806
1, 303
0
8, 338
3,037
5,786
2,986
16,313
43, 599
2,711
800
11,576 12, 324
5,652
10, 234
1,541
201
9, 293
Total taxes on net income
Total cash dividends declared
Net income after dividends
Capital accounts 3
Ratios:
Net income before dividends to capital
accounts (percent)
Total current operating expenses to
total current operating revenue
(percent)
54, 010 77, 444 43, 162 277, 363 1, 166, 064 55, 257 23, 733 266, 383 262,521 96,513 216,068 36, 369
10. 54
12. 27
11. 73
9. 22
7. 82
10. 38
6. 66
8. 62
8. 95
9. 01
8. 81
7. 82
9. 17
10.00
80. 23
66. 93
71.50
72.81
72.25
70. 90
80. 48
72. 96
75.81
67.52
74.88
76. 14
75. 34
68. 22
1
Number of banks at end of the year; data, however, inchide banks which
were in operation part of the year but were inactive at the close of the year.
2
Excludes building officers and employees. Number of officers and employees
are as of the end of the year.
FRASER
Digitized for
2, 193 176, 278
and reserves. These are averages of data from the Reports of Condition of the
previous December and the current June and December of the respective year.
4
Includes National and non-National banks in the District of Columbia
which are supervised by the Comptroller of the Currency.
TABLE
B-27
Income and expenses of National banks by deposit size, year ended Dec. 31, 1965
[Dollar amounts in thousands]
Banks operating throughout entire year with deposits in December 1965, of—
Total
$2,000.0
and under
332
4, 733
Number of banks
Total deposits
$193,417,862 $ 4 6 6 , 4 2 3
Capital stock (par value)
6, 059, 747 2 1 , 1 5 1
48, 067
Capital accounts
11,294,847
Current operating revenue:
Interest and dividends on—
5,660
U.S. Government obligations. . . .
1, 206, 989
997
Other securities
755, 256
Interest and discount on loans
6, 368, 898 15,869
Service charges and other fees on
banks' loans
128
117,483
Service charges on deposit accounts
1,541
489,612
Other service charges, commissions,
fees, and collection and exchange
633
charges
159,008
0
355, 722
Trust department
239, 233
Other current operating revenue
282
Total current operating revenue. . . . 9, 692, 201 25, 110
Current operating expenses:
Salaries and wages: *
5,653
741, 183
Officers
2,597
1, 366, 736
Employees other than officers
Number of officers
Number of employees other than officers. .
Officer and employee benefits—pensions, hospitalization, social security,
insurance, etc
Fees paid to directors and members of
executive, discount and other committees
Interest on time and savings deposits. . .
Interest and discount on borrowed
money
Net occupancy expense of bank
premises
Furniture and equipment—depreciation, rents, servicing, uncapitalized
costs, etc
Other current operating expenses. . . . .
Total current operating expenses. . . .
Net
current
operating earnings
66, 829
325, 758
925
957
307, 998
$2,000.1 to
$5,000.0
1 , 2 7 2
$5,000.1 to $10,000.1 to $25,000.1 to
$10,000.0
$50,000.0
$25,000.0
1, 202
1, 103
$50,000.1 to
$100,000.0
186
384
$4, 396, 858 $8, 620, 857 $17, 175, 689 $13, 168,694
348, 251
424, 652
155, 050
230, 725
749, 242
1, 056, 186
593, 614
352, 222
$13, 193, 601
356, 970
720, 193
45, 433
13,409
145, 038
83, 448
32, 764
276, 935
152,433
69, 968
558, 790
112,857
53, 962
419, 668
1,601
14,458
3,421
27, 973
8,981
57, 769
7,037
42, 538
105, 888
53, 074
416, 300
6,917
39,204
5,082
257
2,598
7,740
1,531
5,288
14, 110
8,475
12, 741
10, 299
16,894
13,928
227, 876
439, 100
883, 267
677, 183
67, 789
206, 580
10, 385
18, 774
13, 738
29, 586
75, 048
34,821
81, 173
234, 743
155, 837
664, 280
1,872, 183
4, 903, 202
144, 599
283, 832
12, 050
69, 372
287, 199
692, 743
22, 977
147, 650
10, 946
24, 296
19, 720
19, 950
60, 265
167, 205
5, 862
123, 786
8,429
260, 337
3,335
197,487
1,905
30, 202
5,592
519, 509
4,370
1,638, 362
5,969
14, 799
82, 188
193,324
60, 113
222, 090
104, 579
503, 932
1,409
11, 159
19,511
39, 037
244, 155
1, 081, 029
697
3,608
6, 389
31, 319
11,299
52, 734
23, 238
106, 609
18, 322
81,413
19,518
79, 324
7, 209, 595
19,816
179, 426
333, 229
670, 672
2, 482, 606
5,294
48, 450
105,871
212,595
512,685
164, 498
503, 097
161, 183
57, 329
25, 905
32
278
407, 909
3 , 8 5 1
457, 033
394, 209
3, 305, 838
21,609
99, 549
4, 367
196, 748
1,073
31,079
503
4,813
244, 237
136,873
1, 230, 460
57, 836
93, 540
4,902
24, 016
5,
36, 309
2, 998, 371
62
$37, 957, 526 $98,438, 214
3, 464, 323
1,058, 625
5,658,715
2, 116,608
63, 352
96,611
6,012
27, 556
54, 804
53, 800
6, 197
15, 372
1 1 2
Over
$500,000.0
90, 902
116,462
9, 088
32, 460
4 , 6 7 8
8 , 3 7 5
36, 838
27, 151
$100,000.1 to
$500,000.0
487
1,362
1, 384, 157
488, 026
3,606,513
1, 296, 689
serves, and profits:
O n securities:
Profits and securities sold or redeemed
. . . .
. .
Recoveries
..
Transfers from valuation reserves. . .
On loans:
Recoveries
Transfers from valuation reserves. . .
All other
Total recoveries, transfers from valuation reserves and profits
Losses, chargeoffs, and transfers to valuation reserves:
On securities:
Losses on securities sold
Chargeoffs on securities not sold. . .
Transfers to valuation reserves
On loans:
Losses and chargeoffs
Transfers to valuation reserves
All other
Total losses, chargeoffs, and transfers to valuation reserves
Net income before related taxes
Taxes on net income:
Federal
.
State
...
Total taxes on net income
Net income before dividends
Cash dividends declared:
On common stock
O n preferred stock
Total cash dividends declared
Net income after dividends
...
50, 380
1, 534
41, 128
43
11
2
823
94
49
2, 396
429
521
4, 778
509
1, 808
3,080
139
994
3, 763
101
582
12,441
129
7, 784
23, 056
122
29, 388
8 938
35, 368
56, 544
472
36
63
2 192
244
711
2 031
784
1, 598
1 806
1, 992
4, 266
741
1,521
2,702
262
1,451
3,886
187
6, 135
13,438
1 247
23, 205
29, 880
193, 892
627
4, 113
7, 759
15, 159
9, 177
10, 045
40, 114
106, 898
48, 944
3, 997
41, 058
69
13
5
778
316
54
2,238
1, 084
473
6, 166
1,004
1, 677
4,026
884
1, 084
3, 791
246
1, 937
10, 986
96
7,522
20, 890
354
28, 306
16, 526
482, 927
81, 279
916
721
152
6,512
7,440
1,978
4,722
17, 845
3,612
2,783
37, 385
7,422
1,325
29, 950
5, 328
122
29, 433
4, 714
59
79, 835
12,291
87
280,318
45, 782
674, 731
1,876
17, 078
29, 974
56, 437
42, 597
40, 243
110, 789
375, 737
2,001, 767
4,045
35, 485
83, 656
171, 317
131,078
130,985
417,351
1,027,850
551, 852
59, 905
895
80
8,488
830
21, 534
1,626
47, 062
2, 790
38, 790
2, 074
39, 837
1,822
125 914
7,430
269 332
43, 253
611, 757
975
9, 318
23, 160
49, 852
40, 864
41, 659
133,344
312,585
1, 390, 010
3,070
26, 167
60, 496
121,465
90, 214
89, 326
284, 007
715,265
681, 537
1,453
1, 337
0
11,218
0
22, 876
17
46, 836
14
37, 309
76
38, 479
128
130, 269
273
393,213
945
682, 990
1, 337
11,218
22, 893
46, 850
37, 385
38, 607
130,542
394, 158
707, 020
1, 733
14, 949
37, 603
74,615
52, 829
50, 719
153,465
321, 107
*Excludes building employees; number of employees are as of the end of the
year.
NOTE: The deposits, capital stock, and capital accounts shown in this table are
as of December. Capital accounts represent the aggregate bank value of capital
stock, surplus, undivided profits, and reserves.
TABLE
B-28
Capital accounts, net profits^ and dividends of National banks, 1944—65
[Dollar amounts in thousands]
Cash dividends
Capital stock (par value)*
Year (last call)
1944
1945 . . . .
1946
1947
1948
1949
1950
1951
1952
1953
1954
1955
1956 . . .
1957
1958
1959
I960
1961
1962
1963
1964
1965
Number
of banks
Preferred
5,031 110,597
5,023 80, 672
5,013 53, 202
5, Oil 32, 529
4, 997 25, 128
4,981 20, 979
4,965 16, 079
4, 946 12, 032
4, 916
6,862
4, 864
5, 512
4, 796
4, 797
4, 700
4, 167
4,659
3,944
4,627
3, 786
4,585
3,332
4,542
3,225
4, 530
2, 050
4,513
2,040
4, 503
9,852
4,615 24, 304
4, 773 27, 281
4,815 28, 697
Common
Total
Total
capital
accounts*
Net profits
before
dividends
$1,440,519
1, 536, 212
1,646,631
1, 736, 676
1, 779, 362
1, 863, 373
1, 949, 898
2,046,018
2, 171,026
2, 258, 234
2, 381, 429
2, 456, 454
2, 558, 111
2, 713, 145
2, 871, 785
3, 063, 407
3, 257, 208
3,464, 126
3, 662, 603
3, 861, 738
4, 135, 789
4, 600, 390
$1,551, 116
1, 616, 884
1, 699, 833
1, 769, 205
1, 804, 490
1, 884, 352
I, 965, 977
2, 058, 050
2, 177, 888
2, 263, 746
2, 386, 226
2, 460, 621
2, 562, 055
2, 716, 931
2, 875, 117
3, 066, 632
3, 259, 258
3, 466, 166
3, 672, 455
3, 886, 042
4, 163,070
4, 629, 087
$4, 114,972
4,467, 718
4, 893, 038
5, 293, 267
5, 545, 993
5,811,044
6, 152, 799
6, 506, 378
6, 875, 134
7, 235, 820
7, 739, 553
7, 924, 719
8, 220, 620
8, 769, 839
9, 412, 557
10, 003, 852
10, 695, 539
11,470,899
12, 289, 305
13, 102,085
14, 297, 834
16, 111, 704
$411,844
490, 133
494, 898
452, 983
423, 757
474, 881
537, 610
506, 695
561,481
573, 287
741,065
643, 149
647, 141
729, 857
889, 120
800, 311
1,046,419
1,042,201
1, 068, 843
1, 205,917
1, 213, 284
1, 387, 228
*These are averages of data from the Reports of Condition of the previous
December and the current June and December of the respective year.
On
preferred
stock
On
common
stock
$5, 296
4, 131
2,427
1, 372
1,304
1, 100
712
615
400
332
264
203
177
171
169
165
99
119
202
1, 126
1, 319
1,453
$139,012
151,525
167, 702
182, 147
192, 603
203, 644
228, 792
247, 230
258, 663
274, 884
299, 841
309, 532
329, 777
363, 699
392, 822
422, 703
450, 830
485, 960
517,546
547, 060
591,491
681, 802
Ratios
Net profits Cash dividends to
before
dividends net profits
before
to capital
accounts dividends
Percent
10. 01
10.97
10. 11
8. 56
7.64
8. 17
8. 74
7. 79
8. 17
7.92
9. 58
8. 12
7.87
8. 32
9.45
8. 00
9. 78
9. 09
8. 70
9. 20
8.49
8. 61
Percent
35. 04
31. 76
34.38
40.51
45.76
43. 11
42. 69
49.04
46. 14
48. 01
40. 50
48. 16
50. 99
49.85
44.20
52. 84
43.09
46.64
48.44
45.46
48. 86
49. 15
Cash dividends on Total cash
preferred dividends
stock to to capital
preferred
accounts
capital
Percent
4. 79
5. 12
4.56
4.22
5. 19
5. 24
4. 43
5. 11
5. 83
6. 02
5.50
4.87
4.49
4. 52
5.07
5. 12
* 4. 83
5.83
2.05
4.63
4.83
5. 06
Percent
3.51
3.48
3.48
3.47
3.50
3. 52
3. 73
3.81
3. 77
3. 80
3. 88
3. 91
4.01
4. 15
4. 18
4. 23
4. 22
4. 24
4. 21
4. 18
4. 15
4. 24
NOTE: For earlier data, see Annual Reports of the Comptroller of the Currency, 1938,
p. 115, and 1963, p. 306.
TABLE
B-29
Loan losses and recoveries of National banks, 1945—65
[Dollar amounts in thousands]
Total loans end
of year
Tear
Losses and
chargeqffs *
Recoveries f
Net losses or
recoveries ( + )
Ratio of net
losses or net
recoveries ( + )
to loans
Percent
1945
1946
1947
1948
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
I960
1961
1962
1963
1964
1965
. . . .
Average for 1945-65
$13,948,042
17,309,767
21,480,457
23,818,513
23, 928, 293
29, 277, 480
32, 423, 777
36, 119,673
37, 944, 146
39, 827, 678
43, 559, 726
48, 248, 332
50, 502, 277
52, 796, 224
59, 961, 989
63, 693, 668
67, 308, 734
75,548,316
83, 388, 446
95, 577, 392
116,833,479
$29, 652
44,520
73, 542
50, 482
59, 482
45, 970
53, 940
52, 322
68, 533
67, 198
68, 951
78, 355
74, 437
88, 378
80, 507
181, 683
164, 765
157, 040
190, 188
239, 319
276, 737
$37, 392
41,313
43, 629
31,133
26, 283
31,525
31,832
32, 996
36, 332
41, 524
39, 473
37, 349
39, 009
50, 205
54, 740
51,506
52, 353
59,423
68, 464
113,635
86,911
+$7, 740
3,207
29,913
19, 349
33, 199
14, 445
22, 108
19, 326
32, 201
25, 674
29,478
41, 006
35,428
38, 173
25,767
130, 177
112,412
97,617
121, 724
125, 684
189,826
+0.06
.02
. 14
.08
. 14
.05
.07
.05
.08
.06
.07
.08
.07
.07
.04
.20
.17
. 13
.15
. 13
. 16
49,214, 115
102, 191
47, 954
54,237
. 11
•Excludes transfers to valuation reserves beginning in 1948.
f Excludes transfers from valuation reserves beginning in 1948.
TABLE
NOTE: For earlier data, see Annual Report of the Comptroller
of the Currency, 1947, p . 100.
B-30
Securities losses and recoveries of National banks, 1945-65
[Dollar amounts in thousands]
Total securities
end of year
Year
1945
1946
1947
1948
1949
1950
1951
1952..
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965 .
. .
...
Average for 1945-65
Recoveries f
Net losses or
recoveries ( + )
$55,611,609
46, 642, 816
44, 009, 966
40, 228, 353
44, 207, 750
43, 022, 623
43,043,617
44, 292, 285
44,210,233
48, 932, 258
42, 857, 330
40, 503, 392
40, 981, 709
46, 788, 224
42, 652, 855
43, 852, 194
49, 093, 539
51, 705, 503
52,601,949
54, 366, 781
57, 309, 892
$74, 627
74, 620
69, 785
55, 369
23, 595
26, 825
57, 546
76, 524
119, 124
49, 469
152,858
238, 997
151, 152
67, 455
483, 526
154, 372
51,236
47, 949
45, 923
86, 500
67, 898
$54, 153
33,816
25, 571
25, 264
7,516
11, 509
6,712
9,259
8,325
9,286
15, 758
13, 027
5,806
12, 402
18,344
21, 198
10,604
6,350
7,646
4, 117
4,650
$20, 474
40, 804
44, 214
30, 105
16, 079
15,316
50, 834
67, 265
110,799
40, 183
137, 100
225, 970
145, 346
55, 053
465, 182
133, 174
40, 632
41, 599
38, 277
82, 383
63, 248
46, 519, 756
103, 588
14, 824
89, 102
*Excludes transfers to valuation reserves beginning in 1948.
fExcludes transfers from valuation reserves beginning in 1948.
Losses and
chargeoffs *
Ratio of net
losses to
securities
Percent
0.04
.09
. 10
.07
.04
.04
.12
.15
.25
.08
.32
.56
.35
. 12
1.09
.30
.08
.08
.07
. 15
.11
.19
NOTE: For earlier data, see Annual Report of the Comptroller of
the Currency, 1947, p. 100.
195
TABLE B-31
Foreign branches of National banks, by region and country, Dec. 31, 1965
Region and country
Latin America
Argentina
Bahamas
Brazil
British Guiana
Chile
Colombia
Dominican Republic
Ecuador
El Salvador
Guatemala
Jamaica
Mexico
Nicaragua
Panama
Paraguay
Peru
Trinidad
Uruguay
Venezuela
Virgin Islands (British)
Continental Europe
Austria
Belgium
France
Germany
Greece
Italy
Netherlands
Switzerland
British Isles
England
Ireland
196
Number
Number
Africa
Liberia
Nigeria
Near East
Dubai
Lebanon
Saudi Arabia
Far East
Hong Kong
,
India
Japan
Malaysia
,
Okinawa
Pakistan
Phillipines
,
Singapore
Taiwan
Thailand
U.S. overseas areas and trust territorie!
Canal Zone
Guam
Puerto Rico
Truk Islands
Virgin Islands
Total
50
6
6
12
5
2
2
5
8
2
2
23
2
15
1
4
TABLE
B-32
Foreign branches of National banks, 1955-65
End of year
National bank
branches as a
Number of
branches operated percentage of total
foreign branches
by National banks
of U.S. banks
1955
1960
1961
1962
85
93
102
111
76.6
75.0
75.6
76.6
TABLE
End of year
1963
1964
1965
National bank
branches as a
Number of
branches operated percentage of total
by National banks foreign branches
of U.S. banks
124
138
196
77.5
76.7
93.5
B-33
Assets and liabilities of foreign branches of National banks, Dec. 31, 1965: consolidated statement
[Dollar amounts in thousands]
Cash and cash items
$126,062
Due from banks (time and demand)
1, 040, 838
Securities
181,231
Loans and discounts
3, 602, 303
Customers' liability on acceptances
503, 637
Bank premises and equipment
40, 159
Other assets
60,117
Due from head offices and branches (gross) . . . 1,686,721
Total
7,241,068
Total demand deposits
Total time deposits
U.S. Government, State, municipal deposits
Certified checks, officers checks, official checks
Total deposits
$1, 432, 169
3, 561, 393
219, 730
42, 009
5, 255, 301
Other liabilities
263, 087
Liabilities on acceptances
504, 533
Due to head office and branches (gross, including
capital)
1,218, 147
Total
7,241,068
197
TABLE
Assets and liabilities of National
B-34
banks, date of last report of condition,
1936—65
[Dollar amounts in thousands]
Tear
1936...
1937...
1938...
1939...
1940...
1941...
1942...
1943...
1944...
1945...
1946...
1947...
1948...
1949...
1950...
1951...
1952...
1953...
1954...
1955...
1956...
1957...
1958...
1959...
1960...
1961...
1962...
1963...
1964...
1965...
Number
of banks
5,331
5, 266
5, 230
5, 193
5, 150
5, 123
5,087
5, 046
5,031
5,023
5, 013
5,011
4,997
4,981
4,965
4,946
4, 916
4, 864
4, 796
4, 700
4, 659
4,627
4, 585
4,542
4, 530
4,513
4,505
4,615
4, 773
4,815
Total assets
$31, 064, 662
30, 104,230
31,666, 177
35, 319, 257
39, 733, 962
43, 538, 234
54, 780, 978
64, 531, 917
76, 949, 859
90, 535, 756
84, 850, 263
88, 447, 000
88, 135, 052
90, 239, 179
97, 240, 093
102, 738, 560
108, 132, 743
110, 116, 699
116, 150, 569
113, 750,287
117, 701, 982
120, 522, 640
128, 796, 966
132, 636, 113
139, 260, 867
150, 809, 052
160, 657, 006
170, 233, 363
190, 112, 705
219, 102, 608
Other
securities,
bonds, notes,
Cash and
due frorn
banks
U.S. Government
obligations,
direct and
guaranteed
$8, 981, 081
8, 550, 493
9, 706, 409
12, 503, 613
15, 120, 067
15, 001, 930
16, 250, 270
16, 080, 664
17,637, 249
20, 178,789
20, 067, 167
22, 075, 590
23, 024, 269
21, 044, 958
23, 813,435
26, 012, 158
26, 399, 403
26, 545, 518
25, 721, 897
25, 763, 440
27, 082, 497
26, 865, 134
26, 864, 820
27, 464, 245
28, 674, 506
31, 078,445
29, 683, 580
28, 634, 500
34, 065, 854
36, 880, 248
$8, 685, 554 $4, 094, 490 $8, 271,210
8, 813, 547
3, 690, 122
8, 072, 882
8, 489, 120
3, 753, 234
8, 705, 959
9, 043, 632
3, 737, 641
9, 073, 935
3, 915,435 10, 027, 773
9, 752, 605
3, 814, 456 11, 751, 792
12,073, 052
3, 657, 437 10, 200, 798
23, 825, 351
3, 325, 698 10, 133, 532
34, 178,555
3, 543, 540 11, 497, 802
43, 478, 789
4, 143, 903 13, 948, 042
51, 467, 706
4, 799, 284 17, 309, 767
41, 843, 532
5, 184,531 21, 480, 457
38, 825, 435
5, 248, 090 23,818, 513
34, 980, 263
5, 937, 227 23, 928, 293
38, 270, 523
7, 331, 063 29, 277, 480
35, 691, 560
7, 887, 274 32, 423, 777
35, 156, 343
8, 355, 843 36, 119,673
35, 936, 442
8,621,470 37, 944, 146
35, 588, 763
9, 425, 259 39, 827, 678
39, 506, 999
9, 166, 524 43, 559, 726
33, 690, 806
8, 823, 307 48, 248, 332
31,680, 085
9, 643, 633 50, 502, 277
31, 338,076
35, 824, 760 10, 963, 464 52, 796, 224
31, 760, 970 10, 891, 885 59, 961, 989
32,711,723 11, 140,471 63, 693, 668
36, 087, 678 13, 005, 861 67, 308, 734
35, 663, 248 16, 042, 255 75, 548, 316
33, 383, 886 19, 218, 063 83, 388, 446
33, 537, 250 20,829,531 95, 577, 392
31, 895, 565 25, 414, 327 116, 833,479
and
debentures
Loans and
discounts
including
overdrafts
NOTE: Reciprocal interbank demand balances with banks in the United States
are reported net beginning with the year 1942.
For earlier data, revised for certain years and made comparable to those in this
Other
assets
$1, 032, 327
977, 186
1, 011,455
960, 436
918,082
897, 004
847, 122
813,468
792, 479
797, 316
830, 513
880, 987
1,063,917
1,058, 178
1, 126,555
1, 259, 008
1, 321, 382
1, 416, 802
1, 668, 736
1, 569, 791
1, 867, 761
2, 173,520
2, 347, 698
2, 557, 024
3, 040, 499
3, 328, 334
3, 719, 607
5, 608, 468
6, 102, 678
8, 078, 989
Total
deposits
Liabilities
for
borrowed
money
Other
liabilities
Capital
Surplus,
undivided
profits, and
reserves
$27, 608, 397
$3, 495 $281, 760 $1, 598, 815 $1,572, 195
26, 540, 694
10, 839
308, 499 L, 577,831 1, 666, 367
28, 050, 676
5, 608
28, 749 L, 570, 622 1, 757, 522
31,612,992
2,882
298, 265 L, 532, 903 1,872, 215
35, 852, 424
3, 127
342, 013 L, 527, 237 2, 009, 161
39, 554, 772
3, 778
330, 585 L, 515, 794 2, 133, 305
50, 648, 616
3, 516
390, 291 L, 503, 682 2, 234, 673
60, 156, 181
8, 155
408, 139 L, 531,515 2, 427, 927
72, 128, 937
54, 180
491, 877 L, 566, 905 2, 707, 960
85, 242, 947
77, 969
559, 103 I, 658, 839 2, 996, 898
79, 049, 839
20, 047
630, 578 1,756,621 3, 393, 178
82, 275, 356
45, 135
705, 185 I, 779, 766 3, 641, 558
81, 648, 016
41,330
774,818 1,828, 759 3, 842, 129
83, 344, 318
7,562
952, 958 I, 916, 340 4,018, 001
89, 529, 632
76, 644 , 304, 828 2, 001, 650 4, 327, 339
94,431,561
15,484 ,621, 397 2, 105, 345 4, 564, 773
99, 257, 776
75, 921 , 739, 825 2, 224, 852 4, 834, 369
100, 947, 233
14, 851 , 745, 099 2, 301, 757 5, 107, 759
106, 145, 813
11,098 ,889,416 2, 485, 844 5,618, 398
104, 217, 989
107, 796 , 488, 573 2, 472, 624 5, 463, 305
107, 494, 823
18,654 , 716, 373 2, 638, 108 5, 834, 024
109,436, 311
38, 324 , 954, 788 2, 806, 213 6, 287, 004
117,086, 128
43, 035 , 999, 002 2,951,279 6, 717, 522
119,637,677
340, 263 2, 355, 957 3, 169, 742 7, 132, 375
124,910,851
110, 590 3, 141, 088 3, 342, 850 7, 755, 488
135, 510,617
224, 615 3, 198, 514 3, 577, 244 8, 298, 062
142, 824, 891 1, 635, 593 3, 446, 772 3, 757, 646 8,992, 104
150,823,412
395, 201 5, 466, 572 4, 029, 243 9, 518, 935
169, 616, 780
299, 308 5, 148, 422 4, 789, 943 10,258, 252
193, 859, 973
172,087 7, 636, 524 6, 089, 792 11,334, 232
table, references should be made as follows: Years 1863 to 1913, inclusive, Comptroller's Annual Report for 1931; figures 1914 to 1919, inclusive, report for 1936, and
figures 1920 to 1939, inclusive, report for 1939.
APPENDIX C
Addresses and Selected Congressional Testimony of
JAMES J. SAXON
Comptroller of the Currency
INDEX
Addresses and Selected Congressional Testimony of James J. Saxon, Comptroller
of the Currency
Date and Topic
Oct. 15, 1965, "Issues in Current Bank Merger Policy": remarks before the Banking Corporation and Business Law Section
of the New York State Bar Association, Buffalo, N.Y
Mar. 23, 1966, before the Financial Institutions Subcommittee of the Senate Committee on Banking and Currency, on the
Bank Holding Company Act
May 25, 1966, "Time Deposit Competition": remarks before the Pennsylvania Bankers Association, Atlantic City, N J
May 31,1966, before the Committee on Banking and Currency of the House of Representatives, on time deposit competition..
Oct. 19, 1966, "Disclosure Standards for Banks—Achievements and Goals": remarks before the Cleveland Treasurers Club,
Cleveland, Ohio
Oct. 21, 1966, "The Antitrust Laws and the Public Welfare": remarks before the Illinois State Chamber of Commerce,
Chicago, 111
Oct. 24, 1966, "The Future of Banking Progress": remarks before the National Bank Division, American Bankers Association, San Francisco, Calif
200
Page
201
202
206
209
211
213
214
REMARKS OF JAMES J. SAXON, COMPTROLLER OF THE CURRENCY, BEFORE THE BANKING CORPORATION AND
BUSINESS LAW SECTION, OF THE NEW YORK STATE BAR ASSOCIATION, BUFFALO, N.Y., OCTOBER 15, 1965
Issues In Current Bank Merger Policy
As a result of certain court decisions within the past
several years, the situation facing the banking industry
today can be likened to the fabled sword that hung
over Damocles. In a most important area of their
operations—expansion through merger—bankers are
uncertain as to what is legal and what is not legal.
Although government may rightly expect its citizens to
comply fully with the law, there is a corresponding
obligation of Government to make the law unambiguous.
The uncertainty in bank merger policy today is a
result of the emphasis placed by the courts and by
the Justice Department upon the desirability of preserving as much competition, in the quantitative sense,
as is possible. They have applied to banking the same
competitive concepts developed in the Sherman and
Clayton Acts for the unregulated industries, despite the
fact that banking is a regulated industry.
Five years ago, the Congress wrestled with this
problem, and the results of their efforts were embodied
in the Bank Merger Act of 1960. The pattern of that
act was to require any combination of banks to be
scrutinized by the three Federal banking agencies and
the Department of Justice. Responsibility for approval of bank mergers rested in each individual case
with a single banking agency, after consideration of
the views of the other two banking agencies and the
Department of Justice on the "competitive factor"—
only one of the seven factors to be applied. The other
factors, to be applied solely by the responsible banking
agency are: The financial history and condition of
each bank involved; the adequacy of the capital structure of the resulting bank; its future earnings prospects; the character and competence of the management; and the effect of the merger in meeting the
"convenience and needs" of the community in which
the resulting bank is located. After considering all of
these factors, decisions were to be reached in terms of
the "public interest."
It was thought that by permitting only those mergers
which a Federal banking agency deemed publicly beneficial in terms of the standards of the Bank Merger
Act, the public interest would be amply protected.
There is considerable evidence and opinion, however,
that the Department of Justice has taken, or may take,
the position that the scope of its functions is to consider
only the effects on competition of a bank merger under
the same tests as apply to mergers in all industries
generally, and that the other considerations listed in
the Bank Merger Act are irrelevant to its functions.
And it is true that the recent decisions of the Supreme
Court in the Philadelphia and Lexington cases seem to
bear out this interpretation of the functions of the
Department of Justice.
This leaves the banking industry in an anomalous
position. Even though there are severe restrictions
over bank entry and bank expansion, the banking industry is now subject to even greater jeopardy under
the antitrust laws than any other regulated industry,
or any unregulated industry. This results because the
Bank Merger Act requires that applicant banks must
present full economic data on the effects of a proposed merger, and these data are made available to
the Justice Department before decisions are reached
by the banking agency. Justice, therefore, if it decides
that the merger is anticompetitive, has a fully documented case to present to a court. Such premerger
notification is an advantage which Justice does not
have in any other industry, despite prolonged and persistent efforts to gain congressional approval for this
procedure.
Some reconciliation of these divergent approaches is
urgently needed, and I should like to outline my own
thoughts on this matter.
First, let me say that this is a conflict that only the
Congress can resolve. We, in our Office, have endeavored to meet the current inconsistencies of policy,
by seeking to bring before the courts the banking factors
which have not been considered in past court decisions
on bank merger cases. This, however, is merely an
expedient. What is needed is a clear statement of
legislative policy.
In developing such a statement of policy, the prime
consideration is to accord recognition to the fact that
banking is a regulated industry, and that the banking
201
authorities are responsible for shaping the banking
structure—through their chartering, branching, and
merger policies—in a manner which will safeguard the
public interest in a viable banking system. For this
reason, there is no way in which conventional antitrust standards suitable for the unregulated industries
can be applied to banking without jeopardizing regulatory policies. A choice must be made whether to require the courts to take cognizance of all the factors
the banking agencies consider in bank merger cases,
or to move in the opposite direction and allow conventional antitrust standards to be applied to banking.
If the latter course is chosen, it will be necessary to
repeal the Bank Merger Act, and to allow free merging,
free entry and free branching in banking subject only
to antitrust limitations.
I should like to say a special word about the socalled "failing bank" test, which even the Department
of Justice concedes may be applied in approving bank
mergers. This is clearly an insufficient test if the purpose of bank regulation is to assure the public of an
adequate supply of banking facilities and services. In
the consideration of bank merger cases, we have encountered many instances in which banks, although
not failing, were chronically troublesome, inefficient
or unaggressive, so that they did not serve their communities satisfactorily. In many of these instances,
merger with another bank appeared the most efficient
and the most effective device to improve the functioning of banks in the affected communities without a
threat to their solvency or liquidity.
Little public attention has been drawn to one of
the most critical aspects of the statutory conflicts between the Bank Merger Act and the antitrust laws.
Although the Bank Merger Act requires the banking
authorities to consider a variety of factors beyond competition, the antitrust statutes—at least, as recently interpreted—consider that the public interest will be
served wherever competition is maintained at its highest level in terms of the number of competitors. In
the interest of sound jurisprudence, it is evident that
the courts, in considering bank merger cases, should
have the benefit of an exposition of the considerations
which led to the approval of the mergers by the banking authorities. In no other way can the full panoply
of public interest considerations be brought before the
courts.
Afinalissue concerns the exoneration of bank merger
cases now in litigation. It would seem logical that,
in view of the reliance which the merging banks properly placed upon the decisions of the banking authorities, and considering the long-standing view that bank
202
mergers were not subject to the antitrust laws, all
mergers approved prior to new legislation should stand
free of antitrust prosecution. Subsequent mergers, of
course, should be treated under the principles embodied in the new legislation. This approach appears
particularly appealing in view of the fact that new
legislation would be designed to resolve a conflict over
the application of the antitrust laws to banking, which
has only recently appeared.
The issues which I have discussed are worthy of the
most thoughtful consideration by those in the legal
fraternity who are concerned with banking and the
antitrust laws. Fortunately, the Senate Banking and
Currency Committee and the U.S. Senate have
recognized the gravity of this problem, and have
made a genuine, constructive effort to resolve it. Unfortunately, similar efforts by the majority of the
House Banking and Currency Committee have been
blocked—at least for this session of the Congress.
BEFORE THE FINANCIAL INSTITUTIONS SUBCOMMITTEE
OF THE SENATE COMMITTEE ON BANKING AND CURRENCY, WEDNESDAY, MARCH 23, 1966
Mr. CHAIRMAN AND MEMBERS OF THE SUBCOMMITTEE ON FINANCIAL INSTITUTIONS : The Office of the
Comptroller of the Currency appreciates this opportunity to set forth its views regarding the amendments to
the Bank Holding Company Act of 1956 proposed by
S. 2353/ S. 2418,2 and H.R. 7371,3 now pending before
the subcommittee.
When enacted in 1956, the Bank Holding Company
Act had two purposes. One: to prevent an undue
concentration of banking resources from being controlled by any bank holding company. Two: to prevent any bank holding company from controlling both
banks and nonbanking businesses. Accordingly, the
Bank Holding Company Act prohibits the formation of
a bank holding company without the approval of the
Federal Reserve Board and prohibits a bank holding
company from acquiring more than 5 percent of the
voting shares of another bank without the approval of
the Federal Reserve Board. Moreover, the Bank
Holding Company Act prohibits a bank holding com1
Introduced by Senator Robertson at the request of the
Board of Governors of the Federal Reserve System.
2
Introduced by Senator Morse on behalf of himself and
Senators Douglas, Long (of Missouri), Mclntyre, Mondale,
Neuberger, and Williams (of New Jersey).
8
Passed by the House of Representatives on Sept. 23, 1965.
This bill was originally introduced by Congressman Patman,
Chairman of the Banking and Currency Committee of the
House of Representatives.
pany from engaging in any business other than the
business of banking or acquiring more than 5 percent
of the voting shares of any nonbanking business.
The amendments now proposed fall into three broad
categories. First, extension of coverage of the Bank
Holding Company Act. Second, modification of restrictions on loans and investments between a bank
holding company and a subsidiary thereof and between
subsidiaries of a bank holding company. Third, miscellaneous changes of a so-called technical or clarifying nature, some of which, however, are patently of
major significance.
Extensions of Coverage
Extension of coverage of the Bank Holding Company Act would be accomplished in three ways. First,
the term "bank holding company" would be redefined
to mean a company which owns or controls 25 percent
or more of the stock of one or more banks. Today,
a bank holding company is defined as a company which
owns or controls 25 percent or more of the stock of each
of two or more banks. Second, certain exemptions
from the definition of a bank holding company and
from the definition of a company which may be a bank
holding company would be repealed. Third, the definition of a company which may be a bank holding
company would be expanded.
We are opposed to the extension of coverage to onebank holding companies.
It is conceded by the Board of Governors of the
Federal Reserve System that this proposed extension
is not necessary to regulate the concentration of banking resources under the control of bank holding companies. The present "two-bank" definition is adequate
for this purpose. The reason put forward by the
Board of Governors in support of the "one-bank" proposal is the second objective of the Bank Holding Company Act—that banks should not be under the control
of companies which also have interest in nonbanking
businesses. The basis for this objective is a fear that
abuses or conflicts of interest may result from a holding company bank extending credit to another business
owned or controlled by the bank holding company
under circumstances that could endanger the bank or
give such business an unfair advantage over its competitiors. It is argued that this possiblity of abuse
applies with equal force to one-bank holding companies as to holding companies with two or more
banks.
The Federal Reserve Board estimates that approximately 600 companies would be made subject to the
Bank Holding Company Act by this extension of cover-
age. At the present time, there are approximately 53
companies subject to the act. Thus, this "one-bank"
proposal would extend the coverage of the Bank Holding Company Act by about 1,200 percent. And the
sole basis put forward for such extension is fear of
possible abuse. There has been no enumeration of, nor
indeed, illustrations of, any abuses which have actually
occurred with respect to one-bank holding companies.
As a matter of fact, this Office, in the exercise of our
supervisory functions, has not become aware of any
abuse and Mr. Martin, Chairman of the Federal
Reserve Board, in his statement to the subcommittee,
stated that the Board is unable to cite a single specific
example of such an abuse "among the hundreds of onebank companies in existence today."
Although the absence of actual abuse does not appear to trouble the proponents of the "one-bank"
proposal, in our view this proposed extension of coverage cannot be justified on imaginary possibilities of
abuse. Inasmuch as the Bank Holding Company Act
is a criminal statute, the evils, if any, at which it is
directed should be well-known and well-defined. It
would be most unwise to extend the punitive sanctions
of this act by these proposed amendments to cover
situations which are purely conjectural and which
are not know to exist.
If, however, the fear of unexplained, unnamed, and
unfounded abuses is, by itself, a sufficient basis for extending the coverage of the Bank Holding Company
Act to one-bank holding companies, it is an equally
sufficient basis for extending coverage of the Bank
Holding Company Act to individuals, partnership, and
all other forms of business enterprise which own or
control 25 percent or more of one or more banks and
also have other business interests.
Mr. Martin noted that about one-fourth of the
estimated number of one-bank holding companies are
located in one-bank towns and in such situations he
considers it particularly desirable that the bank's
credit decisions be based solely on creditworthiness.
We suggest that in most one-bank towns where the
bank is controlled by one individual or a small group
of individuals, such persons also have other business
interests. In this connection, the alleged distinction
between an individual who controls a bank and another business and a corporation which does likewise
is without meaning. Such distinction, which seems
to rest on the Federal Reserve Board's assumption that
individuals are somehow more limited than corporations in their ability to attract capital for expansion
and the Board's supposition that control of bank stocks
by individuals generally is diffused upon their deaths,
203
has no validity with respect to the possibility of abuse
argument.
Mr. Martin's testimony before this subcommittee
suggested possible abuses which, if they existed, would
be prevented. He conjured up the hypothetical cases
of a builder and an automobile dealer who would
be denied credit by the only bank in the town. In
the builder's case, the bank's credit decision would
allegedly be affected by whether or not the builder
would buy lumber from a supplier that is owned by
the same holding company that owns the bank. In
the automobile dealer's case, the bank's decision to
discount the dealer's customer paper would be complicated by questions of how if would affect the competitive position of another automobile dealership
owned by the bank's parent company.
The tie-in situation of the builder is, of course,
prohibited by the antitrust laws, without regard to
the Bank Holding Company Act. The anticompetitive considerations in the case of the automobile dealer
merely point out the dangers inherent in restricting
banking competition. It is clear that the situation of
both the builder and the automobile dealer could be
prevented by affording them an available banking
alternative, such as through branching and new bank
charters.
Turning to another extension of coverage, it proposed to include long-term trusts within the definition
of a company which may be a bank holding company. We are seriously troubled by the intention to
include within the term "company," all nonbusiness
trusts, inter vivos or testamentary, other than those
which, by their provisions, will terminate within 25
years or not later than upon the death of a named
beneficiary. When this broad definition is coupled
with the "one-bank" proposal, we are deeply concerned that an unknown, but large, number of trusts
will be swept under the coverage of the Bank Holding
Company Act. After all, testamentary and inter vivos
trusts, which must conform to the rule against perpetuities, may well extend for more than 25 years
or for more than the lifetime of one named beneficiary.
We cannot believe that the Federal Reserve Board's
list of companies and other organizations that would
apparently be brought under the Bank Holding Company Act by these proposals accurately reflects the
number of trusts which would be affected.
In addition, we are even more concerned by an apparent discrimination in the proposed amendments
against individuals and other trustees that are not
banks. This discrimination springs from the provision of the amendment that would make an individual
204
trustee, be he an attorney or a member of the family,
a bank holding company, while exempting a bank that
serves as trustee. In the light of this distinction, it
should be asked whether a trust with a bank and an
individual as cotrustees would or would not be a bank
holding company. It may also be asked whether the
comments of the American Bar Association have been
solicited on this mater. Since trusts, and the law applicable thereto, have traditionally been a matter of
State law, it is suggested that Congress is entering a
Serbonian Bog.
Investments and Loans Between Members of the Holding Company Groups
The second category of proposed amendments seeks
to modify the restrictions on loans and investments between a bank holding company and a subsidiary thereof
and between subsidiaries of a bank holding company.
It does that by deleting present section 6 of the Bank
Holding Company Act and amending section 23A of
the Federal Reserve Act.
Section 23A of the Federal Reserve Act (12 U.S.C.
371c) establishes for member banks limitations on
lending transactions with certain affiliates based upon
a percent of the capital and surplus of the lending
bank. It also establishes prohibitive collateral security requirements for such transactions. Some reduction of these requirements is permitted when collateral
is an obligation of a State, or a political subdivision or
agency thereof, and making the collateral requirements inapplicable when the transactions are secured
by Federal obligations.
The section is by its terms inapplicable to affiliates
engaged in certain phases of the banking business including the holding of bank premises, conduct of a
safe deposit business, international banking operations,
etc. These are important banking affiliates, but the
list is incomplete. Banks today find it necessary and
desirable to utilize a variety of corporate instrumentalities in conducting the business of banking. The
use of these affiliates should not be restrained by the
limitation and collateral security requirements of section 23A.
The proposed amendment would change the list of
regulated lending transactions to include all asset
purchases under repurchase agreements (not just security purchases). The Board gives no reason for this
mysterious recommendation. There is no indication
either of the kind of assets that are or might be purchased under a repurchase agreement or of the reason
why such transactions should be subjected to regulation. In the case of discount transactions, also to be
added to the list, the proposed amendment would specifically exclude nonrecourse interbank discounts, interbank non-interest-bearing deposits and immediate
credit on uncollected items received from banks. Perhaps if more were known about asset purchases similar
exclusions should be provided for the repurchase
transactions.
Although there appears to be in the section and the
proposed amendment a spark of recognition that the
limitations on loans to affiliates should neither hamper
the business of banking, nor preclude banks from using
controlled corporate instrumentalities in conducting
that business, including the furnishing of the facilities
and services that it requires, its light is hidden and obstructed by a cluttered rearrangement of old provisions
resulting in pedantry without meaning.
For example, Edge Act and agreement corporations
are recognized corporate instrumentalities for international banking. Their intended mode of operation
includes investments in foreign banks and the acquisition of foreign affiliates. They and their 100-percentowned affiliates (except directors' qualifying shares not
to exceed 10 percent) are not subject to the provisions
of the section. The amendment would make the collateral security requirement inapplicable to foreign
affiliates. It seems to us that this provision is broad
enough to be applicable to affiliates resulting from direct foreign investments. It would, however, be wise
also to liberalize the provision relating to indirect foreign investments, that is, the provision relating specifically to the subsidiaries of Edge Act and agreement corporations as well as providing for direct investments.
The amendment would also make the section inapplicable to shares of an investment nature eligible for
investment by National banks under the provisions of
R.S. 5136. This provision is not adequate because it
does not cover the authority of banks to acquire interest in their own corporate instrumentalities. The
solution to the latter problem is suggested by the proposed exemption of transactions between insured
banks. As the Federal Reserve Board itself has commented, "The abuses at which the section is directed
are not likely to arise where the affiliate is a controlled
subsidiary of the lending or investing bank and at the
same time a bank subject to examination and supervision by Federal banking authorities." For similar
reasons, the section should be made inapplicable to
transactions with controlled corporate instrumentalities used by the bank in conducting the business of
banking, or providing essential and incidental facilities
and services. Such affiliates are also controlled subsidiaries of the lending or investing bank and they are
at the same time subject to examination and supervision by Federal banking authorities.
Although we have suggested several ways in which
section 23A might better be amended, it is our firm
belief that it now serves no useful purpose and we
strongly recommend that it be repealed. Any of its
provisions which retain any usefulness should only be
incorporated into the Bank Holding Company Act and
should be limited in their application to transactions
within the bank holding company family with appropriate exemptions for transactions between banks that
are subject to examination and supervision by Federal
banking authorities, and their controlled corporate
subsidiaries.
Technical and Clarifying Changes
Many of the proposed so-called technical or clarifying changes give this Office pause. We will not,
however, burden this statement with a complete list of
the changes with which we are troubled, other than to
note two such changes that are illustrative of the major
substantive problem inherent in the proposals.
The first of these is a proposed amendment to sections 2(a) and 3 (a) of the Bank Holding Company
Act of 1956. These changes recognize that a bank
may itself directly acquire and hold 25 percent or more
of the stock of one or more banks and thereby be a
bank holding company. They reflect a recognition
that there is no need for a bank desiring to acquire the
assets of another bank through a stock acquisition to
resort to use of affiliated trust devices or to the use of a
nonbank holding corporation which is generally no
more than a shell corporation.
We object, however, to treating a bank which requires the controlling stock of another bank as a bank
holding company and thus subject to regulation by the
Board of Governors of the Federal Reserve System.
Unlike holding companies, which were not subject to
Federal control until the holding company act, banks
are directly subject to Federal control. In addition,
banks can only engage in the business of banking.
There is no object to be served by subjecting banks to
the divestiture provisions of the act. Banks, after all,
are only permitted to engage in the business of banking and to hold assets necessary or convenient to the
conduct of their business or acquired in the ordinary
course of their business.
In our view the acquisition by one bank of 25 percent or more of the stock of another bank is, in economic effect and substance, equivalent to a bank
merger, consolidation or asset acquisition. Approval
of the stock acquisition, therefore, should be governed
205
by the Bank Merger Act. Our Office took such position with respect to the proposal of the Chase Manhattan Bank (National Association) to acquire 80
percent or more of the voting stock of the Liberty National Bank & Trust Co. Our view was based both
on logic and the legislative history of the Bank Merger
Act. In fact, we have found this approach to be very
effective in some recent instances, such as the directed
acquisition by the First National Bank of Miami,
through a wholly owned subsidiary, of an entire stock
interest in the successor to the Five Points National
Bank. Thus, we were able to resolve a serious situation with maximum speed.
We firmly believe that most existing bank holding
company structures, with a nonbanking corporation as
the holding company, would disappear with the clear
recognition that under existing law a bank itself may
hold the controlling stock of another bank. The holding company corporation would be collapsed and the
stock of the subsidiary banks would be acquired by the
lending bank in the holding company structure. To
the extent there remained nonbank holding companies
after an express recognition by Congress of the power
of a bank to hold bank stock, the Bank Holding Company Act would and should continue to operate.
The second so-called technical change is the proposal to eliminate the requirement for a voting permit
for a corporation holding the stock of a member bank
to vote such stock. This proposal is conditioned upon
adoption of the one-bank holding company proposal.
If the one-bank holding company proposal is not
adopted, we urge that the voting permit provisions be
retained only if the authority to grant such permit is
given to the Federal bank regulatory agency having
direct supervisory authority over the bank with respect
to which the permit is requested. The present situation as to voting permits is an illogical division of
responsibility and authority, which is subversive of the
dual banking system. In the case of National banks,
it is this Office which is responsible for their supervision. Thus, we should have authority to determine
who may vote the stock of National banks in light of
our daily experience with the banks and knowledge of
persons handling the banks' affairs.
Finally, we should like to comment on a suggestion
made by the IB A, to which Mr. Martin assented.
The suggestion is to require approval by the Federal
Reserve Board for a merger of a bank which is a subsidiary of a bank holding company with any other
bank.
We are firmly opposed to this proposal which is both
an oblique attempt to reopen the Bank Merger Act
206
discussion of recent memory and which would obscure
and duplicate the jurisdictional authority of the Comptroller of the Currency, the FDIC and the Federal
Reserve Board.
Whatever the merits of the basic principle behind
these three bills, we have not seen any convincing
demonstration of abuses or potential evils, to warrant
this large extension of governmental authority over
heretofore unregulated entities.
Thank you for this opportunity to express our views
on these bills.
BEFORE THE PENNSYLVANIA BANKERS ASSOCIATION
ATLANTIC CITY, N.J., WEDNESDAY, MAY 25, 1966
A number of proposals dealing with competition for
funds are now being considered by the Congress. In
varying degrees, these proposals represent serious regressive steps for the entire financial community.
H.R. 14026 would prohibit insured comercial banks
from issuing any negotiable certificates of deposit,
notes, or debentures, and H.R. 14422 would prohibit
banks from accepting time deposits in amounts less
than $15,000. Other approaches have also been suggested which would increase the power of Federal
agencies to limit the ability of commercial banks to
compete for funds. The scope of these proposals astonishes me, in that I can think of no danger, malpractice, or evil which can justify these restrictions.
It should be said, to begin with, that all economic
restrictions which curtail competition are, and properly should be, suspect. That is not to say that all
such restrictions are unreasonable. It is to say that
we must subject every such restriction to the most
careful scrutiny, lest we find ourselves irrevocably entangled in a web of strangling regulation. The test
should be clear and unquestioned public need, and no
such need can be shown for the measures which have
been proposed.
I shall discuss two general topics: First, the effect
which these measures would have on the commercial
banking industry; and, second, the effect that the instruments which these measures seek to eliminate or
restrict now have on other financial institutions.
The use of certificates of deposits, notes, and debentures, in conjunction with the increase in Regulation Q
ceilings has substantially enhanced the ability of banks
to compete successfully with other money market instruments as well as with nonbank financial institutions. In effect, CD's, notes, and debentures have
offered publicly desirable alternatives to savers and
investors.
Since the end of 1961 there has been an increase in
negotiable CD's of about $15 billion, which has accounted for over 25 percent of the growth in time
deposits since that time. Within the last 2 years,
moreover, National banks have issued debentures totalling more than $1 billion. The very fact that savers
and investors have made wide use of these instruments is demonstrative of the need which they have
filled. It is clear that savers and investors have
shown a preference for these instruments and that
their elimination would deprive savers and investors of
attractive alternatives.
A cardinal economic principle is that rigidities in our
economic structure prevent the efficient allocation of
resources. Since Regulation Q has already built into
our system certain unfortunate and damaging price
rigidities,financialinstitutions have had to offer more
effective financial instruments within the limitations ot
Regulation Q. Savings certificates and "small denomination" CD's are examples of such instruments. To
a considerable extent, these instruments have developed as a response to the Federal Reserve's unprecedented decision in December 1965 to put widely different ceilings on time and savings deposits. Since a
number of banks now have a large volume of such
instruments, some of them could face a serious liquidity problem were these instruments no longer available. It should be noted that small denomination
CD's are, and have been for many decades, a very reliable and stable source of funds for commercial banks.
In several sections of the country, particularly in parts
of the Midwest, the CD is the standard form in which
individuals hold their savings. By restricting the use
of CD's, the measures under discussion could lead to a
substantial disruption of presentfinancialrelationships.
In addition, the general effect of eliminating or restricting these instruments is to create more barriers to
the efficient allocation of financial resources, since
savers and investors would be deprived of these heavily
used alternatives.
Negotiable CD's have, in fact, enabled banks to operate soundly with lower liquidity, thereby increasing
the efficiency of the entire banking industry. If banks
are certain they can tap the money market with an attractive financial instrument in order to fulfill recurring liquidity needs, they do not need to maintain high
excess reserves and large secondary reserves, and can
operate safely with higher loan-to-deposit ratios. It is
not surprising, therefore, that negotiable CD's are concentrated in banks with assets over $500 million—the
very same banks which have higher loan-to-deposit
ratios.
The use of debentures has also helped banks to meet
the need for more capital which accompanies rapid
growth. Thus, prohibiting debentures would be another step towards a less efficient banking system. I
cannot believe that any of these results would be in the
public interest.
The growing use of CD's has led to some concern
about potential bank liquidity problems. While misuse of CD's has caused difficulty for a few banks,
there is nothing inherent in the instrument itself to lead
to this result. It is, rather, the ceiling on interest rates
and savings instruments that can create problems. As
long as Regulation Q imposes a ceiling on what banks
can pay in competition for deposits, there is always the
possibility of a liquidity squeeze. If yields on various
money market instruments, such as commercial paper
or Treasury bills, become higher than the rate on bank
deposits, investors may switch out of bank deposits and
into these money market instruments. If, on the other
hand, banks are free to raise their rates on deposits to
competitive levels, they can hold their deposits. The
existence of Regulation Q ceilings is a continuous
threat to bank liquidity, no matter what types of time
and savings deposits banks accept. Bank liquidity
should not be dependent upon arbitrary price regulation, especially when that regulation is not necessary
to achieve effective monetary policy. Thus, given the
unfortunate reality of interest rate ceilings, the use of
negotiable CD's has actually aided banks to avoid a
liquidity squeeze by permitting them to offer a more
attractive money market instrument.
Another facet of these proposals is that they would
aggravate the discrimination against small savers
which now exists as a result of Regulation Q. In December 1965, the Board of Governors increased to 5^s>
percent per annum the maximum interest rate payable
by member banks on time deposits, but did not change
the 4-percent rate payable on savings deposits. This
1J/2 percentage point spread between time and savings
deposits means that unless small savers are permitted to
hold time deposits, they cannot earn as much on their
savings as larger savers. H.R. 14422, because of its
$15,000 minimum on time deposits, would effectively
prevent small savers from holding time deposits, forcing them to accept a lower return on their savings.
Moreover, not only the very small saver would suffer.
An individual with $50,000 to deposit, for example,
frequently divides his funds into five $10,000 accounts
so that the entire $50,000 will be covered by FDIC
insurance. With a $15,000 minimum on time deposits, he could get complete insurance coverage only
if he put his funds into savings deposits rather than
207
time deposits. He is, therefore, left with the choice
between higher earnings or full insurance coverage.
As long as bank assessments are based on total deposits,
there is no justification for lower rates on the insured
portion of deposits. The situation would be even
worse for the small corporation. The Federal Reserve
maintains, wrongly, that corporations cannot hold
savings deposits. Under H.R. 14422 the small corporation with less than $15,000 to deposit could not hold
a time deposit either. It would thus be impossible for
such a corporation to earn any interest at all on
a commercial bank deposit. In summary, I can
think of no reason which justifies these invidious
discriminations.
Now let us turn to the effect which the use of negotiable CD's, notes, debentures, and "small denomination" time deposits have had on nonbank financial
institutions. It is clear that their use has increased
the competition for funds among financial institutions.
This has been a favorable development, a step in the
direction of allowing all types of financial institutions
to compete more freely, constrained only by the requirements of financial soundness. The legislative
and administrative measures under discussion represent a big step backward. They would impair the
efficient allocation of financial resources throughout
the entire economy as well as reduce the efficiency of
the banking industry itself. As Secretary Fowler has
put it: "In principle, it is hard to defend a policy that
insulates banks and other financial institutions from
competing among themselves."
It is very important to realize that the commercial
banking industry faces no serious liquidity problem.
We follow the liquidity position of National banks very
closely. Virtually all National banks have adequate
holdings of liquid assets to meet possible deposit outflows. On the average, the 200 largest National banks
hold liquid assets equal to 30 percent of their total
deposits. The concern about the liquidity problems
inherent in vigorous competition for funds apparently
stems from the savings and loan associations. While
spokesmen for the savings and loan industry have repeatedly suggested that restraints on competition are
necessary to protect commercial banks, there is absolutely no evidence for this.
The tone of much of the current public discussion
would lead one to believe that the savings and loan
industry is in danger of widespread insolvencies. I do
not believe that any knowledgeable observer holds this
view. If it were true, however, the proposals which
have been advanced surely offer no solution, even in
the short-run; retrenchment would still be necessary.
208
But the Federal Home Loan Bank Board is moving
in the opposite direction. Present actions of the Board,
according to its own press release, "liberalized dividend
rates, reserve requirements, and liquidity requirements
of savings and loan associations."
If the solvency of savings and loan associations is
not in question, there would appear to be no justification for these drastic measures. At worst, the savings
and loan associations could suffer a liquidity squeeze.
However, the Federal home loan banks have the authority and have on innumerable occasions in the past
shown their willingness to lend to associations when
necessary. At present, the Federal home loan banks
have outstanding advances to savings and loan associations totaling nearly $6 billion, which is indeed impressive when contrasted with the $600 million which
the Federal Reserve System has advanced to banks.
The problem confronting the savings and loan industry is the need to face up to prospects for reduced
growth or even contraction, together with its corollary
of lower profits and reduced tax benefits. On the one
hand, money market conditions are forcing savings and
loan associations to pay higher rates on their shares in
order to prevent funds from flowing to more attractive
investments, such as commercial paper and commercial bank CD's. On the other hand, the large volume
of savings which in past years has been artificially
channeled into savings and loan associations as a
result of the restrictions imposed by Regulation Q has
created a depressed market for real estate credit,
thereby preventing savings and loan associations from
earning higher yields on their assets.
Current competitive relationships between commercial banks and savings and loan associations should be
examined in the perspective of the whole post-World
War II period. From 1946 to 1962, commercial
banks operated at a serious disadvantage in competing
for savings because of the relatively low Regulation Q
ceilings. For example, until 1962 banks were limited
to a maximum rate payable of 3 percent on time and
savings deposits, while many savings and loan associations paid 4 percent or higher at times. In the 1946—
61 period, commercial bank time and savings deposits
increased by $44.9 billion, while savings at savings and
loan associations increased by $63.5 billion. This was
nearly a ninefold increase for savings and loan associations, compared to less than a twofold increase for
commercial banks. During the last 4 years, on the
other hand, with the commercial banks operating
under less restrictive rate ceilings, the growth in commercial bank's time and savings deposits and in savings at savings and loan associations was nearly equal.
It seems unreasonable to expect a return to the distorted competitive relationships of the 1950's.
Another common argument is that a slower growing
savings and loan industry will divert funds away from
the construction industry. I do not, of course, profess to know which segments of the economy should
be restricted and which should be expanded. But it
is remarkable to me that although we are told that it
is desirable to flood the real estate market with funds,
we are never told why funds should flow indiscriminately into this area of the economy or how large the
flow should be. Personally, I find it difficult to understand why in today's economy it is desirable to maintain the flow of funds to the real estate market while
restricting credit in almost every other segment of the
economy. Without the use of a crystal ball, I prefer
to let the unfettered forces of competition determine
the proper allocation of our resources. There is no
better allocative scheme. If the competitive forces
are such that a slower growing or even contracting
savings and loan industry results, that is no reason to
discard competition for the sake of keeping the savings
and loan industry growing. In fact, it is even possible
that such a contraction over time would alleviate the
profit squeeze which savings and loan associations are
now facing.
In closing, I am convinced that the proposals under
discussion mark a long step backward toward the kind
of economic inefficiency which results from rigid regulation. Recognizing that the public interest is composed of many diverse interests, I believe that the
deeply imbedded tradition of free competition is best
equipped to balance one interest against another. The
primary advantage of the market as an allocator is its
flexibility. A fixed regulation, on the other hand, is
inflexible and rigid, and quickly generates distortions
in a dynamic economy. The proposals now before the
Congress would have us adopt additional regulations
in order to solve the problems created by existing regulations. The proposals would remedy the dislocations and distortions stemming from Regulation Q by
saddling our financial system with even more controls and greater rigidity. I do not think that these
proposals are in the interest of the financial community, or the public.
BEFORE THE COMMITTEE ON BANKING AND CURRENCY
OF THE HOUSE OF REPRESENTATIVES, TUESDAY,
MAY 31, 1966
During the past few weeks, this committee has heard
testimony on several proposals which are directed towards curbing competition between savings and loan
associations and commercial banks. Rather than
focus my attention on these proposals, I wish to address
my statement to what, in my opinion, is the fundamental issue which underlies these proposals.
Whether we think that the difficulty which now
plagues the savings and loan industry is a permanent
problem, a transitional problem, or no problem at all,
the basic issue is still the same: Should Regulation Q
be used to regulate price competition among financial
institutions?
A cardinal principle of our free enterprise system is
that government should impose economic regulation
only in those areas where free market forces lead to
results that are not in the public interest. When the
Government intervenes to fix prices, administrative
decisions are substituted for those of the market place:
the decisions of one man or a very few men replace the
judgments of many. There may be instances in
which this is a desirable course, but the burden of
proof should rest with those who would advocate more
controls over competition, since competition has long
been accepted by both scholars and businessmen as the
driving force behind our system of free enterprise.
Indeed, a competitive system is at the roots of our
traditional political and economic philosophies. Although several proponents of more control have recently appeared before this committee, no one to my
knowledge has offered the kind of convincing evidence
we should demand before acting to increase the restraints on our thrivingfinancialsystem.
Restriction on interest payments go back to the
Banking Act of 1933, conceived in the midst of our
worst financial crisis. There was remarkably little
discussion of interest payments on deposits when that
act was under consideration. What discussion there
was rested on the assumption that the banking troubles
of the 1930's were the result of imprudent banking
practices. Such practices were forced upon the commercial banks, so the argument ran, by the severe
competition for correspondent and other deposit balances. This competition, it was argued, led to high
interest rates on deposits, which compelled banks to
acquire risky assets, thereby exposing themselves to the
illiquidity that pervaded the banking crisis of 1933.
There is no evidence, however, to support the view
that rate competition for time deposits during the
1920's was excessive and led banks to "reach" for
unsound assets. In fact, during this period rates paid
on time deposits by member banks actually declined.
In addition, from 1920 to 1929 commercial banks successfully maintained their holdings of government
bonds at about 10 percent of total earning assets, indi209
eating that they did not attempt to increase their earnings by reducing the proportion of high-quality assets
in their portfolios. More recently, after reviewing the
evidence, both the Commission on Money and Credit
and the President's Committee on Financial Institutions concluded that interest rate ceilings are generally
undesirable.
Current competitive relationships between commercial banks and savings and loan associations should be
examined in the perspective of the whole post-World
War II period. From 1946 to 1962, commercial
banks operated at a serious disadvantage in competing for savings because of the relatively low Regulation
Q ceilings. For example, until 1962 banks were
limited to a maximum rate payable of 3 percent on
time and savings deposits, while many savings and loan
associations paid 4 percent or higher at times. In the
1946-61 period, commercial bank time and savings
deposits increased by $44.9 billion, while savings at
savings and loan associations increased by $63.5
billion. This was nearly a ninefold increase for savings and loan associations, compared to less than twofold increase for commercial banks. During the last 4
years, on the other hand, with the commercial banks
operating under less restrictive rate ceilings, the growth
in commercial bank's time and savings deposits and in
savings at savings and loan associations was nearly
equal.
To my knowledge, the competitive relationships of
the last 4 years have not had any harmful or destructive effects on financial institutions. As far as commercial banks are concerned, their position is sound,
whether we look at quality of assets, earnings, or their
liquidity position. Bank earnings are at an all-time
high. The quality of bank assets has been improving
in recent months. An aspect of tight money conditions and strong loan demand is that it allows banks to
improve their portfolios by weeding out their marginal
loans. Bank liquidity positions are also sound. This
is something we follow very closely and an analysis of
our most recent examination reports shows that the
200 largest banks have, on average, liquid assets equal
to about 30 percent of deposits. These banks have
unquestionably been the most aggressive competitors
for time deposit funds.
Although I do not have detailed knowledge of the
savings and loan industry, there is, in my opinion, no
reason to believe that the industry is facing widespread insolvencies. If there were any basis for the
fears that have been expressed about the industry, the
Home Loan Bank Board would be tightening up rather
than liberalizing requirements for reserves and liquid210
ity of member associations. However, recent actions of the Board, according to its own press release,
have "liberalized dividend rates, reserve requirements,
and liquidity requirements of savings and loan associations." It is difficult for me to understand why the
present situation calls for additional restrictions on
commercial banks when the Home Loan Bank Board
is moving in the opposite direction and liberalizing requirements on savings and loan associations.
I recognize, of course, that compared to past years,
the savings and loan industry has been experiencing
slower growth in recent months. Although savings
and loan associations would like to return to the "good
old days" during which banks were not allowed to
compete vigorously, it is unreasonable to expect a
return to the distorted competitive relationships of the
1950's. Rather than returning to the 1950's, savings
and loan associations must face up to prospects of
slower growth in the future, together with its corollary of lower profits and reduced tax benefits. (To
some extent, as long as savings and loans grow rapidly
they pay virtually no taxes. In 1964, for example,
savings and loan associations paid Federal taxes of
only $124 million, or 17 percent of income after
dividends.)
It is clear that the kind of competition for savings
funds we have witnessed in recent years has not led to
"dangerous" or "destructive" competition but rather
has brought about a healthy and vigorous financial
system. Moreover, not only are there no dangers in
removing Regulation Q, but there are real advantages
to be gained.
The interest rate rigidities imposed by Regulation Q
distort the allocation of resources between different
types of financial institutions as well as among commercial banks themselves. Because of greater efficiency, some banks could pay more than the existing
ceiling rate without engaging in imprudent banking
practices. Other banks, which are less efficient, find
the ceiling a convenient shelter from the rigors of competition. Regulation Q, therefore, imposes price controls that protect the inefficient and discourage the
efficient, a result which conflicts with the goals of our
free enterprise system. Even if this inefficiency were
the sole cost of Regulation Q, and it most definitely is
not, I would regard it as sufficient justification for
abolishing these rate ceilings.
Another aspect that should be noted is the publicity
associated with changes in Regulation Q ceilings.
This publicity, and indeed the publicity associated with
these hearings, calls public attention to the 5 Yz -percent
rate allowable under Regulation Q. As a result, many
people feel that the Government has specified 5/2percent as the rate that banks should pay and that they
are being cheated if their bank pays less. It is not
just the financially unsophisticated who make this mistake. The recent Home Loan Bank Board actions
were reported in the Atlanta Journal as follows:
The Federal Home Loan Bank Board told savings and loan
associations they must pay as high as 5 percent interest on
some forms of savings accounts.
This kind of misinterpretation seems inevitable if we
continue to have fixed ceilings on interest rates which
are subject to infrequent and highly publicized
changes.
In closing, I have been unable to discover any dangers which are clearly associated with rate competition
for savings funds, and am convinced that by eliminating Regulation Q our financial structure, indeed the
entire economy, would realize significant benefits.
The proposals now before this Committee would
remedy the dislocations and distortions stemming from
Regulation Q by saddling our financial system with
even more controls and greater rigidity. I do not
think that these proposals are in the interest of either
thefinancialcommunity or the public.
BEFORE THE CLEVELAND TREASURERS CLUB, CLEVELAND, OHIO, WEDNESDAY, OCTOBER 19, 1966
As high executive officers in many prominent corporations in America, you are vitally interested in
what government and business can do to strengthen
the private corporate structures upon which so much
of our economy depends. The particular concern of
our Office is the National banking system and how it
can best serve its corporate and other customers.
For the past 5 years, all the efforts of our Office have
been toward the goal of modernization of the regulations under which National banks must work and toward permitting the maximum amount of private
initiative by management consistent with the financial
integrity of the National banking system.
As corporate treasurers, you are especially interested
in accounting matters and how the banks with which
you do business present theirfinancialcondition. This
subject has received much attention lately from financial writers, security analysts, accountants, bankers,
and government officials. The published discussions
of the subject we have seen show many divergent approaches and there is far from a consensus as
to what the perfect bank financial statement would
contain. Indeed, among accountants and others there
is not even agreement as to whether uniformity is a
desirable objective in the accounting field overall.
While most would agree that banks, as well as other
corporations, should disclose to their customers and
shareholders full and true statements of their financial
condition, there is by no means agreement that the best
means of achieving this is a set of rules enforced by
governmental fiat. Until such time as accountants
themselves agree on an optimum financial statement,
it is our view that government's role in this area should
be primarily to set standards rather than rules—objectives rather than techniques.
We are proud of the fact that our agency was the
first bank supervisory agency to give attention to the
problem of adequate disclosure by banks to their shareholders and customers. In December of 1962, almost
2 years before the passage of the Securities Act Amendments of 1964, we published a regulation requiring
banks to distribute to shareholders proxy statements
and annual reports containing comparative balance
sheets, profit-and-loss statements, and reconciliations
of capital accounts. Although that regulation, when
issued, applied only to banks with deposits totaling $25
million or more and was later changed to banks with
750 or more shareholders in accordance with the Securities Acts Amendments, the effect of the regulation
was to substantially upgrade disclosure practices by
National banks of all sizes.
In 1964, the Securities Acts Amendments were
passed and, in effect, required by statute the type of
corporate disclosure which our Office had previously
required by regulation. The other two Federal banking agencies elected to impose a single set of accounting rules which were derived from existing SEC regulations for listed companies. While Regulation F
does not prescribe as much detail as the SEC, the philosophy of the regulation is essentially the same. That
philosophy, as we see it, is that adequate disclosure of
a corporation's financial condition can only be insured
by a set of rules which, in effect, resolves disputes existing in the accounting profession.
Since we are not in full agreement with this approach and philosophy, our Office, to date, has not
issued rules which would resolve by fiat such complex
questions as when statements of parents and subsidiaries need be consolidated, the treatment of nonrecurring items of income and expense, the treatment of
valuation reserves for security and loan losses, and
others.
This is not to say that we are unmindful of the importance of improving disclosure methods with respect
to these items. In fact, for many months now a distinguished subcommittee of the National Advisory
Committee to the Comptroller of the Currency on
211
Banking Policies and Practices has been working diligently on these questions. The work of this subcommittee, which is made up of controllers and other top
financial men of leading National banks, is in its final
stages and its report is expected within the next few
weeks. This report will make positive recommendations which we expect will form the basis of regulations or recommendations from our Office on many of
these subjects and which we are confident will have
wide acceptance from National and other banks.
It is sometimes said that banks, because they were
generally not subject to Federal disclosure statutes
until 1964, are behind other industries in the amount
of financial information concerning their operations
which is made available to the public. We do not
think this generalization can be made validly today.
The larger banks of the country have for years issued
annual financial reports to their shareholders and customers, which go far beyond legal requirements and
are of a standard as good or better than nonbanking
corporations generally. The practices of the smaller
banks, we think, have always compared favorably with
other businesses of comparable size.
In the matter of financial disclosure, the record of
commercial banking is indeed far superior than the
record of investment banking. As you know, none of
the country's securities underwriters, brokers, and
dealers, including the largest, are required today to
publish any data concerning their own financial conditions or positions in securities and, in fact, few of
them do.
It is somewhat ironic that some of the loudest calls
for more disclosure by banks come from this same
securities industry which is prone to change the subject when questions of disclosure of its own financial
statements and positions in securities are raised.
Another very important aspect of accounting practice in banks is the matter of audit control, both internal and external. Every well-managed bank has a
system of internal audit control which effectively prevents undiscovered fraud. These systems range from
simple measures, such as compulsory 2-week vacations
for all employees in smaller shops, to the elaborate
automated controls of the large branch institutions.
Our Office recently instituted a program designed to
impel any National bank which did not have an effective internal audit program, to adopt one. Our program was simply to advise all National banks and all
of our examiners that whenever, in the considered
judgment of the Regional Administrator of National
Banks, a National bank did not have an effective internal audit and controls system in being or in plan, that
212
our regional office should itself conduct a negative
reply audit covering at least 20 percent of such bank's
deposit and loan accounts.
The announcement of the program appears to have
had the desired effect and we shall soon be able to
rest comfortably in the thought that 100 percent of
our National banking system is under efficient audit
control.
There has been legislation introduced from time to
time which would require external audits of banks by
certified public accountants. This is a subject which
always arouses a great deal of dispute among bankers
and bank supervisors. I could not adequately go into
the pros and cons of the proposal without unduly prolonging these remarks. It is our view that neither
the accounting nor the banking profession is ready to
implement such legislation today if it were passed.
We do not think there would be enough qualified
accountants to audit all of the banks of the Nation
and we do not think that the benefits to be derived
from compulsory external audit would justify the
tremendous expense involved.
Many National banks today employ external auditors to report to their boards and, in fact, our own
examiners often cooperate with auditors in conducting
joint examinations and audits. The job of auditing
our commercial banks is sufficiently large to require
the use of both internal and external auditors. Here,
as in virtually every other potential area of regulation,
our policy is to permit management a range of choice
of alternative means to the desired end. The particular size, resources, personnel, and problems of the
individual bank should govern this management decision as, indeed, it should all others.
Time has not permitted me to go into our efforts to
liberalize and expand the range of permissible business
activities of National banks. I wish we did have the
time to go into that subject because your companies,
as bank customers, have received many direct and indirect benefits from such efforts. I am sure that many
of your employers have had occasion to benefit from
our rulings on equipment leasing, separate loan limit
treatment on credits to subsidiaries, real estate loans,
international operations, data processing services, and
many, many more.
To paraphrase an expression which once got a very
distinguished business leader and former cabinet member into a bit trouble, we think what is good for banking is good for business. Banking serves business and
the two can only grow together. Our aim has been
to promote the well-being of business, banking, the
public, and the economy in general.
BEFORE THE ILLINOIS STATE CHAMBER OF COMMERCE,
CHICAGO, I I I . , FRIDAY, OCTOBER 21, 1966
We have always had in our country a curious ambivalence in our attitudes toward economic power and
material achievements. We pride ourselves on our
technical excellence and on the great productive capacities of our industries. Yet, we exalt the virtues
of small enterprise and the benefits of sheer numbers
of competitors.
These divergent views have been reflected in the
evolution of our antitrust policy. In the beginning,
our antitrust laws were designed to prevent monopoly
and agreements in restraint of trade—so that the competitive forces could be given greater scope. They
have become, in their recent interpretations, instruments to forestall concentration of economic power—
without regard to the social and economic benefits
which concentration may bring. Thus, from a safeguard against the abuse of power, the antitrust laws
have been transformed—according to the views of
many—into a straitjacket thwarting even the beneficial
performance of the competitive forces.
In the intervening years, the antitrust laws have
had a checkered career. They have been both laxly
and stringently enforced. On some occasions of emergency, such as war or depression, they have been forsaken in favor of centralized and unified action.
Following the demise of the NRA, there was an abortive effort to employ antitrust consent decrees as positive instruments of public regulation comparable to
the NRA Codes of Fair Competition. There are some
who conceive of them in the same manner even today.
In part, these developments reflect a weakness for
simple and precise answers to complex problems, indicating a confusion of ends with means.
The central problem under the antitrust laws is how
to preserve the positive values of free enterprise while
averting the potential abuses. This task was much
simpler three-quarters of a century ago, when the first
antitrust law was enacted, than it is today. At that
time, market power was more largely the outgrowth of
restrictive agreements among competitors. Since
then, there have been vast improvements in technology, transportation, communication, and finance—all
of which have combined to yield advantages to largescale, far-flung, and highly diversified enterprises.
The social benefits of these improvements have been
manifested in the steady rise in our standard of living,
which is unmatched anywhere else in the world.
The more extreme practitioners of the antitrust art
have seen in these developments, not causes for joy, but
reasons for alarm. They have sought to turn our at-
tention from the social and economic consequences of
our production and distribution structure, to the mere
size and number of competitors. They have endeavored to gain acceptance for arbitrary and universal
standards of tolerable concentration in order to make
deceptively easy the very difficult task of deciding—
for a particular market, and in a particular industry—
how far the public may gain, and how far it may lose,
through a balancing of the production and distribution advantages of larger scale enterprise against the
diminished competition which may result.
Indeed, some would have us believe that any diminution in the number of competitors, presumably from
any level, should not be tolerated—so that, in a remarkable inversion of fact and logic, our ideal should
be to fragment our industries into the largest feasible
number of independent competitors, and ignore
entirely the countervailing effects on the well-being of
the individual and the society.
In reality, there is no clear and uniform relationship
between the degree of concentration and the liveliness
of competition which can be applied equally to every
industry and every market. More significantly, the
outcome of competition, and not any measure of its
intensity, is the true criterion of the public welfare.
The performance of our industries in serving the public under the competitive conditions which prevail—
far from being the matter of least concern—is the matter of greatest concern. It is not competition for its
own sake which we seek to preserve—and, least of all,
competition in the naive sense of greater numbers of
competitors—but, rather, the attainment of a standard
of achievement in terms of our social and economic
values.
In banking, the antitrust problem has taken a different form. The competitive forces, and hence the industry structure of banking are subject to explicit public controls in furtherance of certain well-defined goals
of great significance to the economy. So that these
goals may be achieved, the banking authorities have
been given the responsibility to control new bank entry
and the expansion of existing banks through any
means and they have also been given broad supervisory
responsibilities over the operating policies and practices of banks. The banking authorities, in this context of regulation, have an affirmative duty to respond
favorably to bank proposals which, in their best judgment, will advance the public convenience and need.
The effect has been to entrust to the regulatory agencies the task of shaping the competitive structure of
the banking industry so as to serve the public welfare
to best advantage.
213
In this unique environment, characterized by a very
special relationship between the government and the
banking industry, the Antitrust Division has fought
relentlessly to impose a totally different, and conflicting, set of principles. The antitrust laws, which have
been the vehicle of their assault, are premised, in the
most fundamental sense, upon freedom of competition
which it is the purpose of those laws to preserve. The
individual discretion to enter an industry, and to expand within that industry, which lie at the foundation
of the antitrust laws as a safeguard of the public welfare, are basically irreconcilable with the policy of reliance on direct public banking controls to assure the
attainment of social and economic goals. The degree
and form of competition which will most effectively
serve these aims must be within the authority of the
bank regulatory agencies if they are to meet their public responsibilities. Otherwise, they will be deprived of
the chief instrument through which they shape the
industry structure under their purview.
Until several years ago, it was generally recognized
and confidently believed, even by the Justice Department, that the antitrust laws had no applicability to
banking—that the protection of the public good rested
in the chartering, branching, merger, and supervisory
policies of the banking authorities, and not in the
maintenance of banking competition through the
antitrust laws. In 1963, however, in the Philadelphia
National Bank case, the Supreme Court upheld the
Justice Department view that the antitrust laws do
have applicability to banking. Since then, the Antitrust Division has redoubled its efforts to create in
banking the competitive conditions which it is the precise purpose of bank regulation to constrain.
The conflict and confusion which ensued provoked
an intensive reconsideration of this issue in the Congress, and resulted in a new Bank Merger Act which
sought to limit the applicability of antitrust principles
to banking, and to assert positively the authority and
responsibility of the regulatory agencies to approve
bank mergers according to criteria of public convenience and need. Nevertheless, the Antitrust Division
has insisted that the new law did not disturb, indeed
strengthened, the applicability of the antitrust laws to
banking—and once again the issue is being thrashed
out in the courts in an atmosphere of uncertainty
which has done great damage to many segments of
the banking industry.
There are, in my judgment, sound reasons for direct
public regulation of banking competition. But if it
should be decided that antitrust criteria are to be
applied to banking, the present confusion can be ended
214
only by allowing free entry into banking, and by permitting banks to branch and merge without prior
public approval. Only in this way can we be certain
that the potential competitive forces in banking will
become fully operative, and that an antitrust policy,
properly conceived, has a useful role to play. This is
not a course I would choose. But it is infinitely preferable to our Janus-like policy of today, at least as
interpreted by the Justice Department.
We need also a long, hard look at the application
of the antitrust laws to the unregulated industries for
which they were designed. While in those industries
there is no direct public responsibility explicitly to
fashion industry structures in conformance with public
needs—there is the deepest public concern to avert
measures which may impede or impair the effective
functioning of private initiative in furtherance of our
national goals of rising job opportunities, increasing
incomes, improving technology, innovations in product
and method, and prices reflecting the advances in efficiency of production and distribution. It may satisfy
the yearning for simple solutions if the courts can be
persuaded to ignore these social and economic considerations, and center their attention solely on concentration ratios. But this can scarcely be viewed as a
proper objective of public policy. After decades of
legislation, and countless court interpretations—not to
speak of shifting attitudes within the Antitrust Division—we need a fresh and thoughtful reappraisal of
the manner in which the antitrust laws may best serve
the public welfare in the modern economy and in the
years ahead.
BEFORE THE NATIONAL BANK DIVISION, AMERICAN
BANKERS ASSOCIATION, SAN FRANCISCO, CALIF.,
MONDAY, OCTOBER 24, 1966
There is a temptation—in looking back over 5 of
the most eventful and most productive years in the
century-old history of the National banking system—
to recite the long catalog of achievements during that
period. For, indeed, a great many basic reforms were
undertaken which reinvigorated virtually every major
phase of banking operations. The results are evident
in the continued remarkable growth and prosperity of
the banking industry. Something much more profound and much more lasting has been gained, however—something which is not revealed in formal
rulings and cold statistics.
A Resurgence of Spirit
The one incalculable element which confounds
those who would predict the future is the spirit—the
animating impulse—which infuses the attitudes and
influences the conduct of individuals—and industries
as well. In banking, the most powerful element of
progress during the past half decade has been the
lifting of this spirit. Burdened by vague fears inherited from the past, hampered by narrowly conceived
regulatory policies, and constantly distracted by parental admonitions from the public authorities—banking
initiative had for many years been stilled or discouraged. A new spirit now abounds. Banking has responded forcefully and imaginatively to its new
challenges and its new opportunities. It is confident
in its outlook, aggressive in its conduct, and optimistic
of its future. The quality of bank management is
high and continues to ascend as more and more men
and women of vision and enterprise are attracted to
the prospects of this revitalized industry.
Banking Progress and Bank Regulation
What should concern us today are the means of sustaining this progress. The difficulties all stem from
the fact that banking is a regulated industry. Some
of the problems of regulated industries are less fundamental than others. They are convenient targets for
zealous investigators seeking notoriety. They stand to
suffer more when those who represent them before
governmental authorities are unwise in their counsel.
In the case of banking, because it is afinancialindustry
facing competition from less regulated or unregulated
rivals, it is likely to bear the greatest burdens of any
deficiencies in monetary policy.
The most significant barrier to effective bank performance, however, lies in the fact that decisive action
in many respects requires the assent both of government and industry. In unregulated industries, private
decisions govern the formation of new enterprises, the
entry into new markets, the introduction of new products or services, the expansion of facilities, and the
determination of price and production policies. In
banking, however, these are also matters of public concern—and this makes banking the victim of any inertia, myopia, or misdirection on the part of the public
authorities.
Where authority and responsibility are divided in
this way, the risk is great that progress will be retarded
or obstructed. Sheer uncertainty may paralyze all but
the most courageous—a sluggish bureaucracy breeds
a sluggish industry. Regulatory measures hastily enacted or applied in emergencies may prove unwise in
practice. Even wise policies may be overtaken by time,
or become mired in a profusion of prescriptions and
proscriptions which obscure the original purposes.
To sustain the progress we have achieved—to avert
a return to the placid ways of the submissive and regimented life—there must be an urgent sense of need on
the part of the regulatory authorities to adapt public
policies, promptly and effectively, to emerging consumer demands. Within the banking industry, there
must be an atmosphere in which the creative talents
and initiative of the individual are fostered and encouraged. These are continuing tasks which, in a
dynamic economy, are never fulfilled—and they
devolve equally upon government and industry.
The Business of Balnking
The issue of broadest scope which now confronts the
banking industry and the public authorities is to define
the proper range of banking activities. On its face, it
is an anomaly in a private enterprise system to constrain the search for new products, new services, and
new markets. Nothing is more fundamental to a free
society than the unrestricted movement of its productive factors. Indeed, the Nation depends heavily
upon this free mobility to assure the best use of its
resources throughout the economy. Wherever the
range of business activities is confined, there is the
danger that resources will be improperly allocated—
to the benefit of the protected industries and the harm
of consumers generally. Any such restrictions, therefore, require a clear and unquestioned social purpose,
and they must be narrowly construed if the public
interest is to be safeguarded.
These are the principles we have endeavored to follow in our efforts to enlarge the operating powers and
broaden the structural forms of organization open to
banks—so as to provide them with the tools they require in order to make the most effective use of their
capabilities. Through the long years of negativism on
the part of the regulatory authorities, and because of a
consequent lack of banking enterprise, many new
financial markets had been developed, or emerged,
which were wholly, or in large part, dependent upon
service from nonbanking institutions. The regulatory
reforms which were instituted, and the renewal of
banking vigor, have brought to the consumers in these
markets the many benefits of added competition.
This enlivening of enterprise has provoked, among
some, determined efforts to preserve enclaves of private
power against the incursion of banking competition.
It is clear that such narrow considerations of private
advantage cannot justify limitations over the scope of
banking activities. Nevertheless, these claims persist,
clothed in arguments of custom and tradition—and it
is imperative that we should determine whether there
215
are, in fact, any criteria of the public interest which
would support such restrictions.
We have found no considerations of the public welfare which would justify the outright exclusion of
banks from the performance of any financial function.
The banking system, in our highly developed economy,
is one of the chief sources of finance for consumers and
producers alike. If banks were to be excluded from
competing in any financial market, the effective performance of that market would be weakened and the
progress of the economy would, in that measure, be
retarded. For wherever the free flow of financing is
interrupted, projects of greater usefulness will give
way to projects of lesser usefulness.
There is but one consideration of the public interest
which can be made the basis for restrictions over banking activities—that is the necessity to maintain the solvency and liquidity of banks. This criterion, however,
relates only to the manner in which a financial function
is performed, and not to the fact of its performance. It
cannot support the exclusion of banking competition
from anyfinancialmarket.
There can be no dispute about the vital significance
of maintaining bank solvency and liquidity. Without
these safeguards to establish broad confidence in the
banking system, banks could not effectively perform
their two essential functions of channeling savings into
productive uses and providing a large part of the
Nation's money supply. But we must exercise extreme
care not to make a burden out of a safeguard.
The one dominant characteristic of our economy is
its vast potential for growth—and one of the preeminent goals of our society is the desire to realize this
potential fully for the welfare of our citizens. With
a growing and more highly trained population, constantly improving technology, the continued development of new products and new services, and with
ever-changing demands and needs both nationally and
216
internationally—the achievement of our paramount
national aims requires new forms of financing which
may involve new and perhaps uncertain risks.
The banking system must not be forced to stand
idly aside from these tasks, in a backwater isolated
from the currents of national progress. Its essential
role in this respect is clearly recognized in our deposit
insurance system, and in our broad economic stabilization policies—both of which were designed, in part,
precisely for the purpose of enabling banks to perform
the risk-taking function without endangering the security of the banking system. The high quality of
bank management and its natural prudence, if reinforced through enlightened public supervision, will
assure the necessary constraint without the harmful
obstruction to effective bank performance.
A New Awareness
We have learned in the past 5 years both the necessity and the rewards of a regulatory policy shaped to
conform with the times. We have discovered anew
the latent power of private initiative, and the critical
significance of releasing this power. We have found
that the difficult task of regulating a basic industry
within a pulsating private enterprise economy is made
easier through an understanding that decisions should
always rest with the individual unless there is present
an overriding consideration of the public interest.
The strength which has come with this new awareness has reawakened the banking industry and restored
its vitality. The fears which provoked the inhibiting
attitudes and practices of the past have been shaken.
There is now an insistent and growing urge to explore
and innovate—to search for new methods and new
prospects to harness and utilize the great productive
capacity of this industry. We may look forward to
exciting years of achievement, entirely confident of
the desire and the capability of the banking system to
perform its full role in the Nation's progress.
APPENDIX D
Selected Correspondence
of
JAMES J. SAXON
Comptroller of the Currency
226-601—67——15
INDEX
Selected Correspondence of James J. Saxon, Comptroller of the Currency
Subject
Bank holding companies
Bank mergers
Banking services
Bond discount
Business development corporations
Certificates of deposit
Data processing affiliate
Definition of deposits
Deposits in savings and loan associations
Directors' examinations
Educational loans—Higher Education Act of 1965
FDIG Board composition
Independent audits
Interest rates—State laws
International operations
Leasing of public facilities
Lending limit—parent company and subsidiary
Loans for purchase of convertible bonds
Loans secured by U.S. obligations
218
Page
219
225
226
228
228
229
229
230
235
235
235
236
237
237
238
238
239
239
240
Subject
Loans to wholly owned affiliate
Mail service
Mechanical receipt of funds
Mortgage company loan solicitation
National bank as guarantor
National bank stock sales—bylaws
Preemptive rights
Promissory notes
State escheat laws
State taxes on National banks
Stock option and purchase plans
Surplus funds—definition for dividend purposes
Trust activity—State licensing
Trust offices and branch laws
Trust services—banks and bar associations
Time deposit competition
Underwriting
Valuation reserves and lending limits
Window dressing
Page
240
240
241
241
242
242
242
243
244
244
245
246
246
247
247
248
250
251
251
BANK HOLDING COMPANIES
JULY 30,
1965.
Reference is made to your letter of May 13, 1965, requesting permission of this Office for the Atlantic National Bank of Jacksonville, Jacksonville, Fla. (Atlantic
Bank), to acquire ownership of all the outstanding
capital stock of the Atlantic Trust Go. (Atlantic Trust),
also of Jacksonville.
Atlantic Trust is not a bank. Under 12 U.S.C.
1841, however, Atlantic Trust is a bank holding company since it owns 25 percent or more of the voting
shares of more than one bank. Under the same statute,
Atlantic Bank is also a bank holding company since
all the capital stock of Atlantic Trust is held by three
individual trustees for the benefit of all shareholders
of Atlantic Bank as a class.
It is now proposed to terminate the trust and transfer
to Atlantic Bank ownership of all the Atlantic Trust
capital stock. The effect of this transaction will be a
contribution to Atlantic Bank's capital by its shareholders. The Atlantic Trust stock will become an asset
of Atlantic Bank just as if Atlantic Bank had acquired
the stock for cash or other consideration.
On behalf of the Board of Governors of the Federal Reserve System, which administers the Bank Holding Company Act of 1956 (12 U.S.G. 1841-1848), the
Federal Reserve Bank of Atlanta, Atlanta, Ga., by letter dated April 15,1965, has stated, in part, the following with respect to the proposed transaction:
The Board of Governors * * * recognizes that, literally,
under the present proposal, Atlantic Bank would acquire both
beneficial and legal ownership and control of the stock of a
nonbanking bank holding company.
*
*
«
*
*
* * * [V]iewed realistically, consummation of the described proposal by Atlantic Bank would not involve an
acquisition of ownership or control of the kind that Congress
intended to forbid under * * * [12 U.S.G. 1843(a)], and
for similar reasons, the transaction would not result in acquisition of ownership or control of bank stock that would require
the Board's approval under * * * [12 U.S.G. 1842 (a)
(2)] • • •
*
*
•
#
#
In view of the above, the Board of Governors interposes no
objection to the proposed transaction. [Bracketed material
added.]
Having received this ruling from the Board of Governors concerning the Bank Holding Company Act,
Atlantic Bank now seeks the advice of this Office with
regard to its corporate power, as a National banking
association, to acquire and own all the stock of Atlantic
Trust.
The provision of law relevant to the inquiry of Atlantic Bank is 12 U.S.C. 24(7), which provides in pertinent
part that:
Except as * * * otherwise permitted by law, nothing
herein contained shall authorize the purchase by the [National
banking] association for its own account of any shares of stock
of any corporation. [Bracketed material added.]
In our view, this provision does not constitute a
proscription against ownership by Atlantic Bank of all
stock in Atlantic Trust. Its legislative history and its
relationship to other provisions of 12 U.S.C. 24(7),
demonstrate that it pertains only to a National bank
engaging in the business of investing or dealing in securities, including corporate stocks, unrelated to its conduct of the business of banking. It does not deny to
such a bank the well-established power to own corporate stock incident to the conduct of its banking
business.
Prior to the Banking Act of 1933, it had long been
recognized that the authority of a National bank to engage in activities incident to carrying on the business of
banking included the power to own corporate stock for
such purposes. Compare, Concord First National
Bank v. Hawkins, 174 U.S. 364 (1898). In the
McFadden Act of 1927, Congress confirmed this power
when it restricted the extent to which a National bank
could engage in the business of dealing in investment
securities and also restricted the permissible investments
to be made by a National bank in stock of a subsidiary
corporation carrying on the safe-deposit business. In
this connection, it was stated in House Report 83 (69th
Cong., 1st sess. (1926)), at page 2, that:
Section * * * which * * * [relates] to the safe-deposit
business and section * * * which * * * [relates] to the investment-securities business have been combined * * *.
The policy of the bill remains the same but instead of appearing in the bill as new grants of power * * * they now appear
as a confirmation and regulation of an existing banking service
or business. It is a matter of common knowledge that National banks have been engaged in the investment-securities
business and the safe-deposit business for a number of years.
In this they have proceeded under their incidental corporate
powers to conduct the banking business. [The Bill] * * *
recognizes this situation but declares a public policy with
reference thereto and thereby regulates these activities.
[Bracketed material added.]
219
In the same connection, see Senate Report 473 (69th
Cong., 1st sess. (1926)), which states on page 5, that:
Other sections of the bill affirm and regulate practices
which have grown up within the National banking system
under the exercise of incidental corporate powers.
The Banking Act of 1933 added the above-quoted
provision of 12 U.S.G. 24(7) to such section. A
principal concern of Congress in adopting the Banking
Act of 1933 was excessive use of bank credit in carrying
and inflating the prices of securities, particularly common stocks. Congress was especially interested in
certain types of corporate affiliates of banks which
were devoting themselves to perilous underwriting
operations and stock speculation unrelated to the business of banking. A careful restriction of bank investments was considered as one means of preventing
insolvencies. Accordingly, the Banking Act of 1933
amended 12 U.S.C. 24(7), with the following explanation in Senate Report 77 (73d Cong. 3d sess.
(1933)) at page 16:
National banks are to be permitted to purchase and sell
investment securities for their customers to the same extent
as heretofore, but hereafter they are to be authorized to
purchase and sell such securities for their own account only
under such limitations and restrictions as the Comptroller of
the Currency may prescribe such as certain definite maximum
limits as to the amount.
Nothing in the legislative history of this provision of
12 U.S.C. 24(7) suggests that it was intended to repeal
the long standing power of a National bank to acquire
and hold corporate stock for purposes properly incident to its banking business.
The conclusion is reenforced by two other provisions
of the Banking Act of 1933. One of these provisions,
found in 12 U.S.C. 371 (c), restricts the investment
a National bank may make in the stock of affiliates,
which term is defined to include subsidiary corporations and corporations whose stock is held in trust
for the shareholders of the bank. The other provision, found in 12 U.S.C. 371 (d), restricts the amount
a National bank may invest in stock and obligations
of a subsidiary corporation holding the bank's premises.
Each of these provisions is worded as an affirmation
of and a restriction upon a bank's existing power to
make these investments in stock and not as an additional affirmative grant of authority to make such
stock investments. Obviously, therefore, when enacted, these provisions assumed the existence of power
in a National bank to hold corporate stock when incident to carrying on its banking business.
It is accordingly clear that the provision of 12 U.S.C.
24(7) quoted above is not to be construed as denying
220
to a National bank the power to own corporate stock,
or interests therein, when such ownership is a proper
incident to banking. The precise scope of this incidental power has never been denned, nor should it be.
Whether ownership by a National bank of a particular
corporate stock is a proper incident of its banking
business; and, therefore, permissible under 12 U.S.C.
24(7), is a question to be determined by this Office
in light of the development of banking1 and banking
services.
In addition to our conclusion that the provision of
12 U.S.C. 24(7) discussed above does not preclude
ownership by Atlantic National of Atlantic Trust stock,
it is our view that the law specifically recognizes the
permissibility of such ownership. In some cases, the
permission of law referred to in 12 U.S.C. 24(7) is
affirmatively set forth in a statute. For examples, see
12 U.S.C. 601-631, relating to investment in stock of
a corporation principally engaged in international and
foreign banking and holding stock in foreign banks;
12 U.S.C. 1718 (f), relating to investment in stock in
FNMA; 12 U.S.C. 1861-1865, relating to bank service
corporations; and 15 U.S.C. 682(b), relating to investment in stock of a small business investment company.
Frequently, however, such permission of law is set
forth in a statute by implication. For examples, see
12 U.S.C. 24(7) as it relates to the investment in stock
of a corporation engaged in the safe-deposit business;
12 U.S.C. 371 (c) and 12 U.S.C. 371 (d), discussed
above; and 12 U.S.C. 601-631, regarding investment
in stock of a foreign bank (par. 7525 of the "Comptrollers Manual for National Bank"). Nevertheless,
the statutes last cited are generally regarded as each
representing the permission of law required by 12
U.S.C. 24(7) since they subsume ownership by a
National bank of the stocks referred to therein. Similarly, the Bank Holding Company Act contemplates
that a bank may be a bank holding company and,
subject to the approvals required under that act,
acquire and hold controlling stock interests in other
banks directly or indirectly through a nonbanking
bank holding company.
x
The legislatures of a number of States have recognized
that the business of banking, and that which is incidental
thereto, encompasses ownership of corporate stock, including
bank stock representing a controlling interest. See, for examples: Missouri Revised Statutes, ch. 362, sees. 362.105(5),
362.173, 362.197, 362.140; New York Banking Law, sees. 97;
235(la), 235(21) (a) (1) and (b), 508(2); Purdon's Pennsylvania Statutes, sec. 819-1009; Illinois Revised Statutes,
ch. I6J/2, sec. 105; California Financial Code, sees. 762, 752,
758, 759, 754, 761, 769, 3513.
It is, therefore, our opinion that the Atlantic Bank,
may, as a bank holding company, acquire all the stock
of Atlantic Trust. Consequently, this Office will
interpose no objection to the proposed acquisition.
APRIL 7,1966.
Hon. A. WILLIS ROBERTSON,
Committee on Banking and Currency,
US. Senate, Washington, D.C.:
All of us in the Office of the Comptroller of the Currency greatly appreciated your gracious and warm
welcome on March 23, 1966, when this Office testified
before the Subcommittee on Financial Institutions with
respect to proposed amendments to the Bank Holding
Company Act of 1956. With your assent, we submit
our revised statement, herewith, for the record.
In our testimony, we voiced approval of a proposal
which would, by new clarifying language, reaffirm that
a National or other bank may itself directly acquire and
hold 25 percent or more of the voting stock of one or
more banks. We objected, however, to regulation by
the Federal Reserve Board of the acquisition by a bank
of the stock of another bank, as if such acquisition were
the same as an acquisition of bank stock by a nonbank
holding company. While there is reason for retaining
jurisdiction in the Federal Reserve Board over otherwise unregulated nonbank holding companies, such
reasons do not apply to parent companies which are
themselves regulated banks. The acquisition by a
bank of the stock of another bank is, from an economic
and competitive viewpoint, equivalent to a bank
merger, consolidation, or asset acquisition. Logically,
acquisition by an insured bank of stock in another bank
should be subject to the jurisdiction of the Federal
banking agency having primary supervisory authority
over the acquiring bank in the same manner, and governed by the same economic and competitive standards,
as a bank merger, consolidation, or asset acquisition.
Consequently, authority to approve or disapprove an
insured bank's acquisition of stock of another bank
should be vested in the three Federal banking agencies,
in the manner of the Bank Merger Act of 1960, as
amended.
We now believe that there is another aspect of our
position which should be further developed to supplement our testimony.
As you know, the Chase Manhattan Bank (National
Association), New York City, N.Y., recently proposed
to acquire, through an exchange of stock, 80 percent or
more of the voting stock of the Liberty National Bank
& Trust Co., Buffalo, N.Y. Consummation of the
Chase-Liberty transaction would not have had an adverse impact upon banking competition. On the contrary, it would, in our view, have been beneficial to
banking competition.
The Federal Reserve Board, however, opposed the
Chase-Liberty transaction on the ground, among
others, that consummation of the stock acquisition
would be in violation of 12 U.S.C. 36. This statute
governs the establishment of branch offices by National
banks. In effect, therefore, it was the Federal Reserve
Board's position that each banking office of Liberty
would be a branch of Chase, notwithstanding that both
Chase and Liberty would continue as separate corporations after the transaction.
This position of the Federal Reserve Board, in respect of the Chase-Liberty proposal, has ramifications
which transcend such transaction. If correct, the Federal Reserve Board's position would make illegal
many, and perhaps all, existing bank holding company
organizations.
In the typical bank holding company organization, a
large bank sponsors and promotes the organization.
The large bank, through an affiliated trust for the benefit of its shareholders or through a parent nonoperating
shell corporation, dominates and controls the policies
and operations of the other banks in the holding company structure. If separate corporate existence must
be disregarded in the Chase-Liberty transaction (as was
done by the Federal Reserve Board), it logically follows
that separate corporate existence must be disregarded
in the typical bank holding company organization.
Thus, if the Federal Reserve Board's position is sound,
the banking offices of each bank in a bank holding company organization must be considered as branch offices
of the bank which dominates and controls the organization. Consequently, restrictions of State branching
laws would then apply.
We indicated to the Federal Reserve Board the danger for existing bank holding company organizations
which the Board created by its position with respect
to the Chase-Liberty transaction. The Federal Reserve Board, thereupon, attempted to extricate itself
from this self-created dilemma by a pronouncement
in its decision involving the Security New York State
Corp.
Security New York State Corp. is newly formed,
presumably under New York law. It has no financial
history. It proposes to become a bank holding company by acquiring the stock of a $260 million bank
and an $11 million bank. The Federal Reserve Board
states that the condition and prospects of the corpora221
tion depend upon those of its proposed subsidiaiy
banks.
In approving Security New York State Corp.'s proposal to acquire the stock of the $260 and $11 million
banks, the decision of the Federal Reserve Board holds
that the main office and branch office of the smaller
bank will not be branches of the larger bank. This
conclusion is rationalized on the basis that the stock
of each bank will be owned by, and the operations
of each bank will be controlled by, the corporation;
which is, of course, not a bank. In other words, in
the Federal Reserve Board's view, if a banking corporation is the apex of a holding company organization,
the branch problem arises. If, however, a nonbanking
corporation is the apex of the bank holding company
organization, there is no branch problem involved,
notwithstanding that such corporation has no financial
history or significant assets other than bank stock, but
is merely a nonoperating shell corporation.
This attempted distinction by the Federal Reserve
Board, between one form of bank holding company
organization and another, does not bear scrutiny.
There is no difference of substance, but only of form,
if the relationship between two banks is that of parent
and subsidiary or that of two subsidiaries to a nonbank corporation, which the dominant bank organizes
for the purpose of creating the affiliation. Therefore, if the Federal Reserve Board is correct in its
position vis-a-vis the Chase-Liberty transaction, then
the Federal Reserve Board is wrong in its position
vis-a-vis the Security New York State Corp, and vice
versa.
It is our opinion, however, that the error of the
Federal Reserve Board lies in the position that it
adopted with respect to the Chase-Liberty transaction
and not in the Board's position with respect to Security New York State Corp. Proof of the Federal
Reserve Board's error is the Bank Holding Company
Act itself. By the enactment of this statute, Congress
affirmed, despite argument to the contrary, that bank
holding company organizations are not the same as
branch banking organizations. Moreover, just last
year the Federal Reserve Board itself consented to
direct acquisition and ownership by the Citizens &
Southern National Bank and the American National
Bank of Jacksonville of stock in subsidiary corporations
which, in turn, owned stock in other banks located
outside the parent bank's branching areas. The stock
of the subsidiary corporation was, in each instance,
previously held in trust for the shareholders of the
parent bank. In giving its consent, the Federal Re222
serve Board said that "viewed realistically" the acquisitions "would not involve an acquisition of ownership
or control of the kind that Congress intended to forbid"
under the Bank Holding Company Act. This statement was clearly correct, since the Bank Holding
Company Act expressly contemplates that a bank may
itself directly acquire and own stock of other banks
without regard to restrictions of State branching laws.
Therefore, the Federal Reserve Board had itself
answered the very argument it made in the ChaseLiberty transaction and, obviously, the Board's assertion that a parent bank-subsidiary bank structure
would violate branch banking restrictions cannot be
seriously maintained.
We request that this letter be made a part of the
record with respect to our testimony concerning the
proposed amendment to the Bank Holding Company
Act.
MAY
Hon.
6, 1966.
A. WILLIS ROBERTSON,
Committee on Banking and Currency,
U.S. Senate, Washington, D.C.:
On March 23, 1966, this Office testified before the
Subcommittee on Financial Institutions of the Senate
Committee on Banking and Currency with respect to
proposed amendments to the Bank Holding Company
Act of 1956 and other related statutes. At that time,
this Office made several legislative proposals which,
in our view, would greatly benefit the banking industry. You graciously requested that this Office prepare
draft legislation embodying our suggestions and submit
the same to the subcommittee for consideration.
Pursuant to your request enclosed please find the
following:
1. Draft revision of the Bank Holding Company Act
of 1956.
2. Draft revision of section 23A of the Federal Reserve Act (12 U.S.C. 371c).
3. Draft revision of section 5145 of the United States
Revised Statutes (sec. 11 of the National Bank Act,
12 U.S.C. 61).
In general, our draft revision of the Bank Holding
Company Act of 1956 distinguishes between the situation where a corporation, that is not an insured bank,
directly or indirectly owns or controls the stock of two
or more subsidiary banks and the situation where an
insured bank directly or indirectly owns or controls the
stock of one or more subsidiary banks. In the former
situation, the owning or controlling corporation is
called a bank holding company and the Federal Re-
serve Board would continue to have jurisdiction to
approve or disapprove the acquisition by such corporation of bank shares. In the latter situation, the
owning or controlling bank is called a parent banking
association and the authority to approve or disapprove
its acquisition of bank shares is allocated among the
Federal Reserve Board, the FDIG, and this Office, following the pattern of the bank Merger Act. Thus,
the Federal Reserve Board would regulate a bank stock
acquisition by a parent banking association which is a
State member bank, the FDIG would regulate a bank
stock acquisition by a parent banking association which
is a State nonmember insured bank, and this Office
would regulate a bank stock acquisition by a parent
banking association which is a National bank or a
district bank.
The draft revision of 12 U.S.G. 371c is, in substance,
the same as the draft revision of that statute proposed
by the Federal Reserve Board. However, an additional measure offlexibilityis provided to the Federal
Reserve Board and this Office to modify, by regulation
or ruling, the limitations and requirements of the section when appropriate. In our experience, the rigidity
of 12 U.S.G. 371c is frequently a handicap to banks in
carrying out their legitimate domestic and foreign
banking activities through corporate instrumentalities.
By authorizing the Federal Reserve Board and this
Office to selectively modify the limitations and requirements of 12 U.S.G. 371c in appropriate instances, the
unfortunate inflexibility of the statute may be ameliorated. It should be remembered that, although the
Federal Reserve Board's proposed amendment to 12
U.S.G. 371c is made in connection with proposed
amendments to the Bank Holding Company Act, 12
U.S.G. 371c has a much broader impact, affecting
dealings between member banks and their affiliates
whether or not such banks are part of a holding
company system.
The draft revision of 12 U.S.G. 61 would transfer
from the Federal Reserve Board to this Office the
authority to grant voting permits to affiliates holding
the stock of National banks. Under present 12 U.S.G.
337, which would not be repealed, the Federal Reserve
Board would continue to have authority to grant voting
permits to affiliates of State member banks.
The Federal Reserve Board's recommendations to
repeal the provisions of 12 U.S.G. 61 relating to voting
permits and holding company affiliates (and the corresponding recommendation to repeal 12 U.S.G. 337)
was conditioned upon extension of the Bank Holding
Company Act to one-bank holding companies. If
such extension of coverage is not enacted into the Bank
Holding Company Act, the need to regulate voting of
bank stock by one-bank holding companies will remain.
Our proposal for revision of 12 U.S.C. 61 would discontinue the anomaly of this Office being primarily
responsible for the supervision of National banks but
having no control over the issuance of permits to vote
the controlling stock of National banks.
Finally, this Office is concerned by a so-called technical amendment of the Bank Holding Company Act
proposed by the Federal Reserve Board to which we
alluded in our testimony, but with respect to which
no attention appears to have been given by other witnesses. We refer to proposed section l(g) (2) (B) of
the Bank Holding Company Act which would provide
that shares of stock held by trustees for the benefit of
employees of a company shall be deemed to be controlled by such company.
Presumably, the proposed provision last mentioned
is designed to reach the situation where a trust for the
benefit of employees of a bank, such as a pension trust,
holds stock in another bank. Thus, the proposed provision would constitute the former bank as controlling
the stock of the latter bank.
We have eliminated this provision in our proposal
for two reasons. First, there has been no showing of
improper activity on the part of a trust for bank employees which owns the stock of another bank. Also,
there has been no showing of a sufficient degree of
control by a bank over the activities and investments of
its employees' trust so as to justify imputing to the bank
control over bank shares held by such a trust. Second,
it is not only bank stock owned by an employees' trust,
the control of which will be imputed to the company,
but also, shares of any corporation owned by the trust.
Thus, if an employees' trust owns stock in a commercial
corporation, such as General Motors, the control of
such stock would be imputed to the company. If the
company, be it a bank or otherwise, is a bank holding
company, the employees' trust, would be obliged to rid
itself of the General Motors stock, thus depriving the
employees' trust of a valuable asset which would otherwise be available to fund the retirement and other employee benefits to be paid by the trust.
After our March 23 testimony and our letter to you
of April 7, 1966, which further developed such testimony, this Office received many favorable comments
from bankers and bank attorneys with regard to our
proposals. Because our proposals appear to have met
with the approval of a large segment of the banking
industry, we urge that the subcommittee give attention
223
to the enclosed draft legislation in connection with the
pending bills to amend the Bank Holding Company
Act.
We request that this letter, with attachments, be
made part of the record.
JUNE 13,
Hon.
1966.
WRIGHT PATMAN,
Banking and Currency Committee,
House of Representatives,
Washington, D.C.:
Thank you for your letter of June 13,1966, requesting a report from this Office regarding H.R. 7371
(89th Gong., 1st sess.) which has now been passed by
the Senate with extensive amendments. In the event
the House of Representatives requests a conference
with respect to H.R. 7371, as amended by the Senate,
we urge that you give support in the conference committee to two legislative proposals made by this Office.
The first proposal is for the enactment of clarifying
statutory language which would affirm that under
Federal law a National bank, and, thus, a State-chartered member bank may, subject to regulatory approval, acquire and hold stock of another bank.
Under the banking laws of many States, a State-chartered bank is permitted to acquire the stock of another
bank.
Contrary to the opinion of this Office, the Federal
Reserve Board generally holds* that presently Federal
law does not seem to permit a National bank or a State
member bank to acquire and hold stock of another
bank. Therefore, today, a member bank which desires to establish a system of subsidiary banks is compelled, by the Federal Reserve Board's interpretation,
to resort to a nonoperating shell corporation (which is
not a bank) as a device through which to establish
a bank holding company structure.
In our view, the Federal Reserve Board's position plainly exalts form over substance. Thereby, the
Federal Reserve Board compels a National bank or
a State member bank to be devious, rather than direct,
in ariving at the same result, which the law recognizes
as proper when subject to regulation, namely, establishing and operating a bank holding company system.
We are, moreover, at a loss to understand the Federal
*See, however, the ruling of the Federal Reserve Board
with respect to the Citizens & Southern National Bank, Atlanta, Ga., and the Atlantic National Bank of Jacksonville,
Jacksonville, Fla. These rulings are inconsistent with the
Board's position.
224
Reserve Board's slavish adherence to its position.
Clearly, it would be preferable to permit banks to act
as holding companies since all of the activities of banks
are regularly examined and supervised. To foster nonbank holding companies, which are unregulated except
for the blunt tool of the Bank Holding Company Act,
is obviously short-sighted as well as delusive.
Another facet of the proposal is to affirm by appropriate statutory language that for purposes of Federal
regulation a bank's acquisition of the stock of another
bank is not, and cannot be, substantively different from
a merger or consolidation of two banks. From a regulatory viewpoint, a bank's acquisition of the stock of
another bank is equivalent to a bank merger or consolidation, insofar as the economic impact and public
benefit and interest are concerned. In fact, H.R.
7371, as passed by the Senate, recognizes this principle
by proposing to adopt within the Bank Holding Company Act the provisions now found in the Bank Merger
Act relating to antitrust actions against bank mergers.
The antitrust provisions contained in the Bank
Merger Act were adopted by Congress because it believed that bank mergers are different from other
mergers and, therefore, require special antitrust treatment. The only basis upon which similar antitrust
treatment can be imported into the Bank Holding
Company Act is the assumption that an acquisition of
bank stock by a bank holding company is essentially
the same as a bank merger. We believe such assumption can, of course, be valid only if the bank holding
company is itself a bank.
In such case, we would agree that special antitrust
treatment is warranted. But, in such case, we can see
no justifiable basis for vesting jurisdiction exclusively
in the Federal Reserve Board to regulate a bank's
acquisition of the stock of another bank. This is inconsistent with the pattern followed by the Bank
Merger Act which vests authority to regulate bank
mergers and consolidations in the FDIC, the Federal
Reserve Board, and this Office, depending upon
whether the acquiring bank is a State-chartered nonmember insured bank, a State member bank, or a National or district bank, respectively. We believe that
the regulatory pattern contained in the Bank Merger
Act should be followed by the Bank Holding Company
Act with respect to the acquisition of bank stock by
banks.
Of course, if a bank holding company is not a bank,
then it is questionable that the acquisition of bank
stock by such a bank holding company is the equivalent
of a bank merger or consolidation and that special
antitrust treatment is justifiable.
The second proposal involves an amendment of section 25 of the Federal Reserve Act (12 U.S.G. 601)
which would be made by H.R. 7371, as passed by the
Senate. The amendment would authorize National
Banks to apply to the Board of Governors of the Federal Reserve System for permission to make direct investments in foreign banks not engaged in activities in
the United States.
This Office has long advocated the application of
the principle of direct investment for conducting the
international and foreign business of American banks.
We are pleased to see that the consideration is being
given to statutory recognition of this principle.
We have also been concerned, however, that the
responsibility for supervising the international and foreign activities of National banks has been divided between the Board of Governors of the Federal Reserve
System and the Comptroller of the Currency. At this
time, when National banks are operating 95 percent of
the foreign branches and conducting a preponderance
of the international and foreign business of American
banks, it seems inappropriate to add still another responsibility in this area to the Board of Governors.
We urge that section 25 be amended at this time to
authorize National banking associations to file applications with the Comptroller of the Currency for permission to exercise the powers therein described, including
the new power to make direct investments in foreign
banks. Appropriate language for such an amendment
is enclosed herewith.
If section 25 were thus revised, the third paragraph
of section 9 of the Federal Reserve Act which already
contains provisions for the establishment of foreign
branches of State member banks could be amended to
authorize such banks tofileapplications with the Board
of Governors of the Federal Reserve System for permission to exercise their powers to make direct and indirect
investments in international or foreign banks.
Under present law, it is the Comptroller of the Currency who is charged with responsibility for the supervision and regulation of virtually the full range of National bank activities, including the examination of
National bank foreign branches. The authority
granted to the Board of Governors of the Federal Reserve System by section 25 of the Federal Reserve Act
(which applies directly only to National banks) results
in an undesirable and unnecessary fragmentation of
supervisory authority over National banking associations. It materially dilutes the power of the Comptroller to achieve optimum supervision of National banks
which operate foreign branches and which conduct
international and foreign business. This is of increasing concern to this Office in view of the recent and
marked acceleration of the international and foreign
operations of National banks. The law, as it now
stands, is but a remnant of a former supervisory scheme
in which the Secretary of the Treasury and the Comptroller of the Currency were member of the Board of
Governors of the Federal Reserve System and thereby
exercised a voice in decisions on matters affecting the
international and foreign activities of National banks.
The Secretary and the Comptroller are, of course, no
longer members of the Board.
While we do not at this time propose any changes in
section 25(a) of the Federal Reserve Act which provides for federally chartered foreign and international
banking corporations (Edge corporations), we are
studying the establishment, operation, and supervision
of these corporations and expect to have a report
and suggested legislation for presentation to the next
Congress.
BANK MERGERS
OCTOBER 26,
1965.
Hon. A. WILLIS ROBERTSON,
Committee on Banking and Currency,
U.S. Senate, Washington, D.C.:
I have read your remarks before the Senate on
October 20 concerning the bank merger bill, and I
want to take this occasion to express my great personal
admiration, and that of my associates, for your persistent efforts, through the years, in support of legislation which safeguards both the public interest and the
effective functioning of the commercial banking industry in our country.
Your perceptive understanding of the Nation's
banking problems, and your stanch advocacy of a
sensible approach to bank regulation, have represented
the single most significant influence in this area during
the period of your long and distinguished association
with the Senate Committee on Banking and Currency.
I am taking the liberty of circulating this letter to
National banks throughout the country.
225
BANKING SERVICES
MARCH 8,
1966.
Hon. ABRAHAM J. MULTER,
Subcommittee of Bank Supervision and Insurance,
House of Representatives, Washington, D.C.;
You have requested the views of this Office on
H.R. 117 which is designated, "A bill to prohibit banks
from engaging in the business of personal property
leasing." This Office strongly opposes the passage of
the legislation.
This Office fundamentally disagrees with the purpose of this legislation which is to unduly restrict, for
the private benefit of a competing group, the business
operations of banks. We see no reason why a bank
should not be permitted to engage in all forms of
financing and perform all phases of the business of
banking for its customers which its management
believes can be performed profitably.
The objective of this bill appears contrary to the
intent of Congress expressed in the National Bank
Act, that National banks shall have "all such incidental
powers as shall be necessary to carry on the business
of banking" (12 U.S.C. 24, par. 7). Congress, in
1864, wisely did not attempt to define the business
of banking as it then existed. They foresaw that the
business of banking would change and develop with
the passing years. The sweeping character of these
changes is evidenced by the variety of nonbank financial institutions, including leasing companies, which
exist today in response to public financial needs which
banks, in part, failed to satisfy. H.R. 117 would
constrict for the benefit of these leasing companies the
powers of banks which, asfinancialservice institutions,
are best situated to respond to the public demand for
what is essentially a financing transaction.
Banks have, from the beginning of commercial banking, financed the acquisition and the use of personal
property. They have lent money on the security of
some form of ownership or control of the property
financed. They have also lent money to lessors on the
security of the lessee's agreement to pay rent. The
power of banks to engage in lease financing transactions is entirely afinancingpower. While the banks
may become the owner of commodities, they may not
carry out the functions of the merchant. They may
not purchase commodities for stock, and hold them
for eventual anticipated lease or sale. They may purchase only at the request of a customer who wishes to
have the full and immediate use of the commodity on
226
a lease basis. Banks become the owner of commodities in permitted lease financing transactions principally for the purpose of providing a well-defined financial, and not a merchandising, service. They neither
offer nor solicit the sale of commodities—but only of
financing. When banks enter into direct lease financing arrangements, they compete not with leasing companies, but with other sources of financing. The
distributive and property management functions, as
contrasted with financing, are really performed by the
lessee himself, where the transaction is handled directly
by a bank.
This Office understands the opposition of those engaged in direct leasing who contend that they may be
hurt competitively where such activities are conducted
by banks; but, this Office sees no legel or policy basis
for eliminating or preventing such competition. The
argument of some leasing companies that banks are
violating their exclusive domain of direct leasing of
personal property is entirely without merit. Such
lessors, in most instances, are thinly capitalized corporations which discount their leases with a bank, act
solely as holders of title, and are nominal debtors. As
such, they are relatively expensive retailers of bank
credit. Throughout the private enterprise economy
of this Nation, under the influence of competitive
forces, there continues a constant search for improved
means both of production and distribution. It is not
unfair for any entreprenuer to devise less costly and
more effective methods of serving consumers, which
is, indeed, the basic aim that we seek to achieve under
our free enterprise system. If banks are able to provide a less costly means of financing the distribution
of commodities and services, such result inures only
to the advantage of the consuming public. It is the
consumer, and not any class of producers or distributors
who ought to be safeguarded.
It is the position of this Office that it would be an
anomaly for Congress to reserve to the benefit of a
select group a particular segment of financial business,
while it prohibits that same business to the banks,
which were clearly created by the Federal and State
Governments for the purpose of meeting and satisfying
public financial needs. Banking, like any industry, is
entitled to the benefits of new business forms and
developments in financial transactions and, in the
opinion of this Office, it would by myopic and contrary
to the public interest to attempt to constrict the banking
industry as this bill would.
MARCH 8,
1966.
Hon. ABRAHAM J. MULTER,
Subcommittee of Bank Supervision and Insurance,
House of Representatives, Washington, D.C.:
You have requested our views on H.R. 112, which
would prohibit banks from performing certain nonbanking services, and H.R. 10529, to prohibit banks
from performing professional accounting services.
We strongly oppose the legislation because we do not
agree with its fundamental purpose, which is to constrict by governmental fiat the business operations of
commercial banks. Why should a bank not be permited to perform whatever clerical, administrative,
bookkeeping, statistical, etc., services for its customers
which its management believes can be performed profitably? We can understand the opposition of groups
who imagine they would be hurt competitively by such
activities, but we see no legal or policy basis for eliminating such competition.
We do not think the argument of some accountants
that banks are transgressing on their domain is tenable.
The practice of accounting is regulated by State laws
throughout the country. Any acts by a corporation
within a State's borders which were violative of such
licensing statutes, would be subject to prosecution.
This has not happened to date because the type of services which we are concerned about here are not, in fact,
professional services, but are repetitive, clerical-type
functions which are susceptible to automation. This
whole problem is a creature of the automatic data processing machine. The claim of unauthorized accounting is also being raised as a smokescreen by some data
processing machine interests who are no more qualified
as accountants than are bankers.
The spirit of this bill is directly at odds with the
previously expressed intent of Congress as long ago as
1864 and as recently as 1962. In 1864, in the National
Bank Act, Congress stated that National banks shall
have "all incidental powers as shall be necessary to
carry on the business of banking" (12 U.S.C. 24, par.
7). Congress, in 1864, wisely did not attempt to define
the business of banking as it then existed. They foresaw that the business of banking would change and
develop with the passing years. The sweeping nature
of the technological changes in the banking business is
strikingly illustrated by the necessity for the passage
almost a hundred years later of H.R. 8874, the bank
service corporation bill (Public Law 87-856, 87th
Cong,. Oct. 23, 1962), which deals with the virtual
necessity of the use today by banks of expensive automatic equipment.
H.R. 112 and H.R. 10529 do just what Congress in
its wisdom in 1864 would not do—attempt to define the
business of banking. This definition which is limited
to acting as "depository, lender, trustee, or agent" is
entirely inadequate as a description of modern commercial banking. In any event, we do not think it is
any more desirable to attempt to legislate such a definition in 1966 than it was in 1864.
In 1962, Congress passed H.R. 8874, the bank service
corporation bill, which enpowered banks to invest in
corporations created for the purpose of rendering clerical services to banks. The proponents of H.R. 8874
thought that the bill was necessary because of existing
prohibitions against National banks' owning the stock
of corporations.
There was no question concerning the banks' right
to perform these services directly for their customers
on their own equipment. We regard it as highly unfortunate that a provision was added to H.R. 8874 at
the last minute, prohibiting bank service corporations
from performing any services for anyone other than
banks.
The Senate Banking and Currency Committee, in its
reports on H.R. 8874, had this to say on the subject of
the increasing use of automation equipment by banks:
The demand for bank services is increasing at an extremely
rapid rate. Many banks have found it difficult to acquire
adequate personnel to handle this mounting workload. Testimony indicated that the volume of checks in circulation has
increased tremendously during the past two decades. It was
estimated that the check volume in 1939 was 3.5 billion. The
volume is increasing at the rate of about one-half billion items
per year. By 1970 the number of checks is expected to be at
an annual rate of 22 billion. In addition to check handling
there is a need for automation of other bank services. Some
banks are now processing their savings accounts, computing
payrolls, calculating other credits and charges, and preparing and mailing statements through the use of automatic
equipment.
The high cost of equipment makes it impossible for the
majority of banks to buy this equipment. In some cases they
are able to lease it, or to have their material processed by firms
owning this equipment. But in many cases these solutions are
not practicable or desirable.
Larger banks are generally able to afford this automatic
equipment, but smaller institutions find the cost prohibitive.
According to a study made by the Federal Reserve System,
nearly all large banks in the group they surveyed are now
using some form of automated equipment or plan to do so
within the next 3 years. However, the ratio of automating
banks to the total number of banks falls rapidly as one moves
down the scale in bank size. Only about one-fifth of the
banks with deposits of $25 to $50 million have automation
plans and among smaller banks the proportion is negligible.
Thus, it is becoming more and more difficult for smaller
banks to compete with larger banks in offering complete and
227
efficient banking services to their customers. Testimony was
received which indicated that, unless a satisfactory means is
devised whereby smaller banks may acquire benefits of automated equipment, many of them may be absorbed by larger
banks or compelled to merge with other banks in the area.
We believe it would be quixotic for the Congress to
attempt, now, to stem the performance of automation
services for their customers by banks. Banking, like
any industry, is entitled to the benefits of technological
change and, in our opinion, it would be wrong and
perhaps futile for Congress to attempt to shackle this
industry with this bill.
We strongly urge against enactment of H.R. 112 and
H.R. 10529. With your permission we would also like
to insert in the record the attached article from the
January 1966, edition of the "Business Lawyer" written
by Ralph F. Huck, a well-known banker, scholar, and
member of the Illinois bar; chairman of the Sections Committee on Banking of the American Bar
Association.
JULY 1, 1966.
This is in reply to the letter of June 10, 1966, addressed to this Office by your counsel in which he
requests that we cite the statutes on which a previous
letter from Regional Administrator Robson regarding
a National bank's data processing center was based.
In his letter of April 20, 1966, Mr. Robson stated that
the National bank may establish and operate a data
processing center in a city, for the purpose of performing data processing services for itself and other banks
in the area, providing the center not receive deposits
or pay checks, nor lend money.
Under 12 U.S.C 29(1) a National bank is empowered to purchase and hold real estate as shall be
necessary for its accommodation in the transaction of
its business. This Office has stated that real estate
necessary to the accommodation of a National bank's
business includes real estate used by it for data
processing centers. See paragraph 3005 of the
"Comptroller's Manual for National Banks."
In regard to the question of whether the location of
a data processing center complies with the requirements of the Federal branch statute, 12 U.S.C. 36, it
should be noted that 12 U.S.C. 36 (f) defines a branch
as "any branch bank, branch office, branch agency,
additional office, or any branch place of business * * *
at which deposits are received, or checks paid, or money
lent." Since deposits will not be received, checks
228
paid, nor money lent at the data processing center, the
center will not be a branch of the bank.
We understand that another bank in the area although not opposed to the establishment of the center,
would prefer that a bank service corporation be used,
and has doubts as to whether a National bank is empowered under the law to perform data processing
services directly for other banks at a location unavailable for a branch office.
This Office has no doubt and it is our official position
that National banks, pursuant to 12 U.S.C. 24 under
the "incidental powers" clause, may own and operate
data processing centers and may sell the services of
such centers to other banks with which it maintains
business relations as well as to nonbank customers.
Such centers do not perform the functions of a branch
bank and, therefore, branch restrictions are not applicable to them.
We hope that this letter, setting forth the statutory
bases for Regional Administrator Robson's letter, is
fully responsive to the inquiry by our counsel.
BOND DISCOUNT
FEBRUARY 25,
1965.
To all Presidents of National Banks:
Numerous inquiries continue to be received concerning the handling of bond discount.
As has been the policy of this Office since August
of 1963, there is no objection to the accrual of bond
discount, whether arising upon original issuance or
upon purchase in open market. There should also
be a concurrent accrual of income taxes on such discount. This policy applies to any bond which qualifies either as a public security or as an investment
security within the meaning of those terms as defined
in section 1.3 of the Investment Securities Regulation
(12 CFR 1.3).
BUSINESS DEVELOPMENT CORPORATIONS
OCTOBER 1, 1965.
This in reference to your letters dated September
7, 1965, to this Office. You are researching business
development corporations and their relationships with
National banks. You seek any information this Office
may be able to provide on the subject of business
development corporations, the legal basis for such
corporations, and the advisability of participation or
investment in such corporations by National banks.
As is stated in paragraph 7480 of the "Comptroller's
Manual for National Banks," as a necessary business
expense, may make reasonable contributions to local
community agencies and groups to further the physical,
economic, and social development of their communities. Such contributions may take the form of an
investment in a corporation organized to carry on
such activities. The aggregate investment in such
corporations may not exceed 2 percent of the bank's
capital and surplus. However, to the extent that
such an investment does not qualify as an "investment
security" within the meaning and requirements of
sections 1.3 (b), 1.5, and 1.6 of the Investment Securities Regulations (12 CFR 1.3 (b), 1.5, and 1.6) and 12
U.S.G. 24, it must be charged off as a business expense
and not carried as part of the bank's assets.
National banks may also lend funds to corporations,
which are organized to further the physical, economic,
and social development of their communities. Such
extensions of credit are subject to the usual statutory
lending limits of 12 U.S.G. 84. In appraising the
credit quality of these loans, however, our examiners
take into consideration the publicly beneficial purpose
of such commitments.
It would be inappropriate for this Office to express
any views with respect to the legal basis for business
development corporations except to note that such
corporations are permitted under the laws of many
states.
CERTIFICATES OF DEPOSIT
JUNE 28,1966.
To the Presidents of All National Banks:
For several months now the competition for deposits
among all financial institutions has been particularly
intense. As a result of this competition some financial
institutions have been tempted and in several cases
have, in fact, resorted to advertising campaigns which
may have misled some members of the public. We
have been aware of such campaigns on the part of certain savings and loan institutions.
I am pleased to report that in the National banking
system there has never been, and there is not now, any
significant problem of misleading advertisements.
Occasionally, however, an extremely small number
of banks have been tempted to offer their certificates
of deposit in a manner which was not in keeping with
the best interests of their own institution and the fine
image that is deservedly enjoyed by the commercial
banking industry. These isolated cases have been
dealt with by our Office on an individual basis and, in
all instances where corrective action was suggested,
immediate steps were taken by the bank to avoid the
possibility of any further criticism.
It may be useful, however, to have before you an
illustration of the kinds of representation that we feel
are not in keeping with the customary high standards
of prudence displayed in the National banking system:
A National bank should avoid offering its certificates
of deposit with a representation that the purchaser
would receive a "25 percent profit" on his investment
or deposit. It would be preferable to state the dividend
income on an annual basis such as "5 percent per annum" and to refrain from using the term "profit" to
refer to the interest payments. Similarly, if a bank is
offering its certificates on which the bank will not reduce the interest rate during the term of the instrument,
no representation should imply that there is a guarantee
by any third party.
Should you have any questions with regard to any
proposed advertisement, the appropriate regional administrator of National banks may be consulted, thus,
avoiding possible criticism by other government officials who have expressed their interest in this area.
DATA PROCESSING AFFILIATE
MARCH 11,
1966.
This is in reply to your letter of February 25, 1966,
wherein you request the advice of this office with respect to the purchasing by the subject bank of $150,000
worth of securities in a data processing company. You
state that the total investment would be divided between two classes of stock resulting in the bank holding a majority of the shares entitled to vote. You
further state that the name of the company would
identify it with the subject bank and the company's
services would be sold as bank services. It is our understanding that there will be a contract between the
bank and the data processing company on terms which
would prohibit a discriminatory denial of bank services to a competitor of the subject bank.
It appears from the information set forth in your
letter that if such a proposal is consummated, the
data processing company will be an affiliate of the
bank within the meaning of 12 U.S.C. 221a(b) (1)
and, as such, would be subject to supervision and regulation by this Office, such as, 12 U.S.G. 481 (examinations) and 12 U.S.G. 161 (reports of condition).
Concerning the authority of a National bank to
purchase corporate stock, your attention is directed to
12 U.S.C. 24(7). It is the opinion of this Office
that the proscriptions against the investing or dealing
229
in securities by a National bank contemplates securities which are unrelated to its banking business. However, the subject bank's proposal to purchase corporate stock of a data processing company which will
provide banking services to the subject bank and independent customers is clearly incidental to the banking business and this Office will interpose no objection
to the proposed purchase of stock as outlined in your
letter of February 25, 1966.
DEFINITION OF DEPOSITS
FEBRUARY 23, 1966.
BOARD OF GOVERNORS OF THE
FEDERAL RESERVE SYSTEM,
Washington, D.C.:
On January 26, 1966, the Board published in the
"Federal Register" a notice that it is considering the
amendment of its Regulation D: Reserves of Member
Banks and Regulation Q: Payment of Interest on
Deposits. The notice invites comments to be submitted
in writing to be received not later than February 25,
1966.
The Board proposes to amend regulations D and
Q by redefining the term "deposit" to include any
indebtedness arising out of a transaction in the ordinary course of business with respect to (1) funds received or (2) credit extended by the bank. Excepted
from this definition* are—
(1) Indebtedness due to a Federal Reserve bank;
(2) Certain interbank indebtedness;
(3) Indebtedness arising from repurchase transactions involving direct obligations of the United
States; and
(4) Indebtedness subordinated to the claims of depositors and general creditors which has an original
maturity of more than 2 years.
Authority for Regulation D
Both regulations D and Q purport 1 to be issued
pursuant to the authority of section 19 of the Federal
Reserve Act. Section 19 prescribes the minimum
reserves which banks are required to maintain against
1
The Board exceeded the authority granted by sec. 19
when it defined "savings deposits" by the character or general
purposes of the depositor (thereby prohibiting corporate
savings accounts). Law Department Memorandum, 101st
Annual Report, Comptroller of the Currency, p. 472. The
Board also has exceeded the powers granted it by sec. 13 of
the FRA by permitting the financing of security dealers, thus,
extending the privileges of member banks to nonmembers.
230
their demand and time deposits and authorizes the
Board to change by regulation the reserve requirements "in order to prevent injurious credit expansion
or contraction." The regulations thus authorized and
others relating to reserve requirements are contained
in regulation D.
Authority for Regulation Q
In 1933, section 19 was amended (act of June 16,
1933), to prohibit the payment of interest on demand
deposits and to authorize the Board to prescribe by
regulation the rate 2 of interest which may be paid
by banks on time and savings deposits. The regulations relating to the payment of interest on deposits
are contained in regulation Q.
Authority To Define Deposits
Thereafter, the Board requested authority to define
"deposits and related terms for reserve and interest
requirements respecting deposits." The reasons for
this request were explained by Mr. O'Connor, Comptroller of the Currency, then a member of the Federal
Reserve Board in his testimony before the Senate
Banking and Currency Committee:
We had a number of discussions in the Federal Reserve
Board, gentlemen, after the passage of the 1933 act when you
eliminated the interest on demand deposits, as to what constituted a demand deposit, a time deposit or a savings deposit.
We found great difficulty in applying definitions that were
in the act, and we found some of the banks attempting to
circumscribe the prohibitions; and we wanted, when we found
those evasions to keep correcting the definition until they
could not evade it.8
The authority requested was granted by an amendment of section 19 (act of Aug. 23, 1935, 49 Stat. 712)
to authorize the Board "for the purposes of this section" to define the terms "demand deposits," "gross
deposits," "deposits payable on demand," "time de2
An unlimited rate could and should be prescribed in some
circumstances. The authorizing paragraph enumerates a
number of factors that form the basis for differing rates.
The conclusion is inescapable that the Board has a duty to
exercise its authority so as to prescribe rates appropriate to
the circumstances. Some situations, considered elsewhere in
this letter, would require a rate free to move with the market.
8
Hearings before Subcommittee of Senate Committee on
Banking and Currency on S. 1715, Banking Act of 1935, 74th
Cong., 1st sess., p. 168. Sec. 19 originally contained the
following statutory definition of demand and time deposits:
Demand deposits within the meaning of this act shall
comprise all deposits payable within 30 days and time
deposits shall comprise all deposits payable after 30 days
and all savings accounts and certificates of deposit which
are subject to not less than 30 days' notice before
payment.
posits/5 "savings deposits," and to "prescribe such rules
and regulations as it may deem necessary to effectuate
the purposes of this section and prevent evasions
thereof."
It is apparent that the Board was granted the authority to define deposits to enable it to distinguish between
demand deposits, time deposits, and savings deposits
because of the differing reserve requirements applicable
to such deposits and because the payment of interest on
demand deposits was prohibited and the interest rate
on time and savings deposits is subject to such regulation as may be necessary and appropriate in the circumstances. There is no suggestion or basis in the
statute or its history that the Board has been, or is
authorized to broaden and drastically change the
historic deposit concept in the manner in which it now
proposes.4
Promissory Notes
The Board states that its proposed amendments are
intended principally to bring promissory notes within
the definition of deposits. The Board ruled (12 GFR
217.138, 29 F.R. 13604) in September 1964 that since
promissory notes "constitute borrowings, they are not
subject, under present law and regulation, to the interest rate limitations or reserve requirements prescribed
for deposits by the Board." The proposed amendments
say, in fact, that borrowing not subject by law to interest rate limitations or reserve requirements can by fiat
expressed in a mere change in regulation be transformed into deposits subject to such limitations and
requirements.
An interest bearing note with a maturity of less than
30 days, thus arbitrarily transformed, would become a
demand deposit upon which the payment of interest
would be prohibited. Banks would, thus, effectively
be proscribed from utilizing such notes to secure funds
available at interest for less than 30 days.5 Further,
since banks possess the broadest and most effective
range of money market contacts and are the prime
mobilizers of short-term money balances, the proposed
action would so reduce the scope of money market
operations as to impair this vital function. Such action is not only unwise, it is plainly beyond the scope of
the Board's present authority.
While the proposed action would not prohibit the
sale of notes with maturities of more than 30 days, it
* See note supplement to this letter dealing with the historical distinction between deposit and borrowing.
8
Regulation Q classifies deposits payable in less than 30
days as demand deposits on which the payment of interest is
prohibited.
would subject them to reserve requirements and deposit
insurance premiums, which would increase the bank's
borrowing costs, and to interest rate limitations, which
would limit the ability of banks to compete effectively
with unregulated borrowers. This transformation, reducing the effectiveness of what is now a useful tool in
a lawful market, would for the same reason require
additional statutory authority.
Deposits Do Not Include All Bank Indebtedness
The proposed amendments would define nearly all
bank indebtedness as deposits subject to reserve
requirements and interest limitations. Such action
would not prevent any alleged evasion of law, but is
itself a distoration of concepts long recognized by the
National banking laws and in banking history itself
going back to the law merchant. Section 82 of title 12
of the United States Code (R.S. 5202) limits the indebtedness of a National bank and lists 10 exceptions
to the limitation prescribed. The second exception
is for moneys deposited with and collected by the association. This is the class of indebtedness which Congress has chosen to regulate in section 19 of the Federal
Reserve Act and which is the proper subject of Regulations D and Q.
Notes—A Separate Class
The first exception in 12 U.S.G. 82 is for notes of circulation. While circulating notes are no longer in
use, the promissory note which the Board now proposes
to classify as a deposit would be more correctly classified as a demand in the nature of a note of circulation.
Its modern usefulness lies in the fact that it is an appropriate instrument for the money market and cannot
under present law be regulated in the same manner as
deposits.
Certificates of Deposits as Money Market
Instruments
Demand and time deposits as presently regulated
by section 19 and Regulations D and Q have not in
recent years provided sufficient funds to the major
banks for their banking operations. The negotiable
certificate of deposit represents an effort on the part of
the banking industry to obtain funds in the money
market within the deposit regulations. The negotiable certificate of deposit is a time contract with respect to the bank but its negotiability and the availability of a market make it equivalent to a demand instrument with respect to the holder. It has been
regarded as subject to the reserve requirements and the
231
interest rate limitations. The developments during
1963 through 1965 have made apparent both the usefulness and limitations of the negotiable certificate of
deposit as a money market instrument.
When the interest rates in the money market approached the ceiling imposed by Regulation Q, the
Board was faced in December 1965 with the dilemma
of raising the ceiling for the benefit of the major banks
which had outstanding large sums in certificates of
deposit which would not be renewed unless a higher
interest rate could be paid, or keeping it at the level
appropriate to regulate the normal deposit business of
the great majority of small banks. The Board resolved
this dilemma by raising the ceiling, thereby creating
serious problems for the smaller banks. The Board
had a responsibility in these circumstances to eliminate
the ceiling, thus allowing the rate to move with the
market for the certificates of deposit used as money
market instruments. If such action had been taken,
the smaller banks would not have been subject to a
compulsion to offer a ceiling rate. This episode clearly
indicates that money market transactions now necessary
to modern banking are basically different in form, concept, and law from deposit transactions and cannot be
treated by the Board as deposits subject to deposit regulation without further congressional authority, if at all.
In fact, it is not seen how Congress itself can lawfully
change borrowings into deposits or deposits into borrowings. It should be noted that the application of
deposit regulations to money market transactions cannot regulate this market, in which unregulated lenders
and borrowers participate, but can only deny banks
access to the market. When banks must compete with
unregulated borrowers for a source of needed funds,
they cannot succeed if they are forbidden to pay interest
for short-term borrowings or are forbidden to pay the
going rate for borrowings of a longer term.
Repurchase Transactions
The Board suggests that the proposed amendments
are limited in their application to promissory notes.
The specific exception applicable to indebtedness
arising from repurchase transactions involving direct
obligations of the United States makes it appear, however, that the indebtedness arising from other repurchase transactions is intended to be treated as a deposit.
The sale of securities with an agreement to repurchase
them at a stated time and price is another useful and
suitable tool for obtaining funds in the money market.
While these money market transactions have been used
by banks as a means of obtaining funds, this affords
232
no statutory basis for treating the obligation arising
out of a contract to purchase a security, as a deposit
subject to deposit regulation.6
Bankers Acceptances
The extended definition appears also to apply to
bills accepted by banks on behalf of their customers.
The acceptance of a bill of exchange represents a
credit extended by a bank in the ordinary course of
business and results in a liability limited by 12 U.S.G.
372 and excepted by the fourth exception from the limitation imposed by 12 U.S.C. 82 on the indebtedness of
National banks. It would thus represent a deposit
within the definition proposed by the Board. Although no funds have been received and the bank has
only a contingent liability to make any payment, reserves and deposit insurance premiums would be
required which would greatly increase the cost of this
most useful and economical banking instrument.
These ordinary banking transactions have not been
used as a means of evading laws or regulations. They
are not deposits and they need no further regulation.
Again, there is no statutory basis for defining such
transactions as deposit transactions.
Subordinated or Capital Notes
Assuming for the purposes of this paragraph the
Board possesses the authority to define and regulate
promissory notes as deposits, the treatment by the proposed amendment of subordinated or capital notes
would present serious practical problems. The proposal would except from the definition of deposit,
"indebtedness subordinated to the claims of depositors
and general creditors that has an original maturity of
more than 2 years." In illustration, the Board applies
6
Indeed, if it is to be classed as a deposit, it would be a
secured deposit and banks are authorized to give security
only for deposits of public money (12 U.S.C. 90). Accordingly, if repurchase transactions are now lawful, they are
not deposit transactions and there is no statutory authority
for the Board to define them as deposits.
The distinction between loan and deposit has become important in a number of cases dealing with the question of
whether or not a bank has the power to pledge its assets as
security for deposits. In Divide County v. Baird, 55 N.D.
45, 212 N.W. 236, 51 ALR 296, the court noted that while
a bank may pledge its assets to secure a loan to it, it has
no implied power to pledge its assets to secure a private
deposit. The court said:
There is such a distinction between a deposit and a
loan of money that no helpful analogy can be drawn,
with respect to the power to pledge paper to secure a
deposit, from the fact that the assets of a bank may be
pledged to secure a loan.
this exception to debentures or notes subordinated to
the claims of depositors and all other creditors. This
is intended to except the so-called capital note or
capital debenture from the reserve requirements and
interest rate limitations. However, the exception, as
worded, would require changes in the language currently used in capital notes. While all capital notes
are subordinated to the claims of depositors, few of
them are subordinated to all other creditors of the
bank. Capital note instruments commonly provide
that they are not to be subordinated to other capital
notes or other types of long-term debts. There are
also some capital note issues which are subordinated
only to those liabilities carried on the balance sheet of
the bank under the item of deposits. While issues outstanding on January 20, 1966, are to be excepted by
proviso, there remain the problems of how such issues
may be renewed and whether such extensive subordination is neecssary. If it is not, this represents another
example of the careless denial to the bank of a legitimate tool which they have found useful.
Secured Notes
In an illustration of a transaction not "in the ordinary course of the bank's business," the Board observes
that where a "member bank borrows funds on its note,
secured by a mortgage on the bank premises, and uses
the proceeds to pay for renovations," such a transaction would not constitute a deposit. This illustration
raises more questions than it answers. Suppose the
bank borrows in a similar manner to obtain additional
working funds for use in general banking: It is unclear
whether the use of the proceeds determine the status
of the obligation. The vagaries inherent in the quoted
illustration would present serious interpretative
problems.
Summary
The Board has no authority to define as deposits,
transactions which are outside the historic deposit concept. The Board's authority to define deposits is
limited to distinguishing between different classes of
deposits.
There is no statutory authority, no case law, or other
precedent which justifies this attempt by the Board to
apply deposit regulation to promissory notes or other
money market transactions. In addition, such a definition, by denying banks access to funds available in
the money market, would be a positive hindrance to
the ability of the banking system to serve a modern and
expanding economy.
226-601—67-
This issue is of great importance to the efficient
functioning of the National banking system and is,
therefore, a valid concern of this Office. We do not
believe that the Board can or should proceed as it has
proposed, without at least obtaining an opinion of the
Attorney General as to the legality of its proposed rule.
Should the regulation be issued, this Office would have
to give consideration to the manner in which the question can best be presented to the courts for final
determination.
NOTE SUPPLEMENT DEALING WITH HISTORICAL DISTINCTION BETWEEN DEPOSIT AND BORROWING
Numerous courts, as well as leading banking law
authorities, have drawn a clear distinction between
bank borrowings and bank deposits. In his treatise
on banking, Zollman states ("Zollman on Banks and
Banking," sec. 3154 at pp. 153-154):
The main purpose of a loan is investment. The main
purpose of a deposit is safe-keeping. A deposit is clearly not
a loan pure and simple. The depositor deals with the bank
not merely on the basis that it is a borrower, but that it is a
bank subject to the provisions of law relating to the custody
and disposition of the money deposited and that the bank will
faithfully observe such provisions. The loan in effect is on
condition that the use conform to the safeguards provided
by law. The acceptance of such deposit implies that the
bank and its directors agree to conform to the conditions
named * * *.
The bank is not required to hunt up the depositor and
pay him the money, as an ordinary lender is bound to do with
his creditor. It is not an ordinary debtor. Its breach of its
obligations has very serious public consequences. It is quasi
public in its nature.
And at section 4823 (p. 310), the same writer
declares:
Loans and deposits are essentially dissimilar. A loan is a
contract by which one delivers money to another who agrees
to return an equivalent sum at a future time. The property
in the sum loaned passes to the borrower. The loan is presumptively made on interest. The contrary is true of a
deposit. The depository must generally deliver the deposit
on demand and need not pay interest unless interest is specifically stipulated. A deposit is primarily for the benefit of the
depositor, while a loan is primarily for the benefit of the
borrower.
To the same effect is the following passage from
another leading authority, "Michie on Banks and
Banking" (ch. 9, sec. 3 at p. 21):
The recognized differences between a "loan" and a "deposit" are that a loan is primarily for benefit of bank, but a
deposit is primarily for benefit of depositor, a loan is not
subject to check, but a deposit ordinarily is, a loan usually
arises from necessities of borrowing bank, but a deposit from
233
the confidence of depositor in its strength, and a loan ordinarily is sought by bank for its own purposes, but a deposit is
ordinarily made by depositor for purposes of his own.
The immediately foregoing excerpt is quoted with
approval by the U.S. Court of Appeals for the Fourth
Circuit in Schumacher v. Eastern Bank & Trust Co.,
52 F. 2d 925, 927 (1931).
In McCormick v. Hopkins, 287 111. 66,122 N.E. 151,
153, the Supreme Court of Illinois said:
Deposits are made in a bank in accordance with universal
commercial usage, which becomes a part of the law of the
transaction. They are neither loans, nor bailments, in the
strict sense of the term. A deposit is a transaction peculiar
to the banking business, and one that the courts should recognize and deal with according to commercial usage and understanding. * * * An ordinary deposit in the usual course of
business, while it creates the relation of debtor and creditor, is
not a loan to the bank. Officer v. Officer, 120 Iowa, 389,
94 N.W. 947, 98 Am. St. Rept. 365; Hunt v. Hopley, 120
Iowa, 695, 95 N.W. 205. The word "deposit," according to
its commonly accepted and generally understood meaning
among bankers and by the public, includes not only deposits
payable on demand and subject to check, but deposits not
subject to check, for which certificates, whether interest-bearing or not, may be issued, payable on demand, or on certain
notice, or at a fixed future time.
To the same effect is the following quotation from
the Court's decision in Texas & P. Ry. Co. v. Pottorff,
63F.2dl,4(4thCir.l933):
We agree with this view that a deposit does indeed create
a debt, but it creates something more. That a deposit is one
thing, a loan another. "The striking fact remains * * *
that a real difference between a deposit and a loan has always been assumed, as a matter of custom, in the banking
business itself, and in all legislation dealing with the subject."
The distinguishing characteristics between deposit
and borrowing were discussed at length in 42 Columbia
Law Review at page 1030 et seq. At page 1037, the
author states:
Perhaps the most significant distinctive feature of a bank
deposit is what may be called its monetary or currency aspect,
in the sense that the deposit itself is, to the depositor, money;
"bank money" or "deposit currency" in economic terminology.
This currency aspect with the attendant element of negotiability is one reason why a transfer of money is required to
be at the basis of the deposit. What the depositor does in
placing his money in the bank is in effect to transform "hard
money" and paper money into bank money, a transaction
similar to an exchange of specie for redeemable paper money.
What the depositor wants and expects, when he places his
money in the bank, is that it be ready for his use as soon as
he needs or wants it. This is true, not only of demand
deposits, but of time and savings deposits as well, since in practice both types of deposits are subject to payment upon demand; for a bank to insist upon its right to notice would
create disastrous doubts as to its solvency. The depositor,
then, does not consider the deposit in terms of a chose in
234
action, nor of the bank's debt to him, but as "my money at
my banker's." For accounting purposes bank deposits are,
particularly in America, often included in the depositor's
financial statement as "cash on hand." And in the interpretation of bequests of "money," "ready money," and "cash
on hand," bank deposits are practically always construed to be
included.
Closely connected with this currency feature of the deposit
is the safekeeping aspect; the depositor assumes that his money
is safer in the bank than in his own pocketbook, home or
office. This safekeeping idea is also one of the distinctive
roots of the deposit relation; as is borne out by the etymology
of the word deposit itself. Though the fungible character of
money was instrumental in changing the obligation of the depository from one requiring the returning in kind into a duty
to return a like amount, the safekeeping aspect of the deposit
remained untouched; sound banking practice and legislative
regulation up to and including the Federal Deposit Insurance
Law have contributed to preserve and emphasize this aspect.
It can no longer be said, as did the court in Foley v. Hill (9
Eng. Rept. R. 1002 (1848), that a bank has unrestricted
dominion over funds deposited with it. The restrictions inherent in the reserve requirements of the Federal Reserve
System and in the regulations of State banking authorities,
make such a position untenable.
To summarize: Bank deposits are characterized by their
monetary aspect and by the element of safekeeping, both
of which are absent in the loan relation, the basis of which
is the supplying of credit.
In his text, "Money in the Law, National and International" (1950), Professor Nussbaum writes at page
105 et seq., as follows:
A bank deposit is not a loan to the bank. "A loan is
primarily for the benefit of the bank, a deposit is primarily
for the benefit of the depositor." The distinction was well
in ancient Roman law where the "depositum irregulare" was
contrasted with the "mutuum." The former was not a
feature peculiar to banking, but a broad concept applying
to fungible things conveyed by the "depositor" to the "depositary." As at present, special legislative restrictions upon
loans did not apply to "irregular deposits." Canon law was
at a later date concerned with this problem, since there was
much discussion of whether the scriptural prohibition of
interest applied to interest allowed by depositary bankers.
Modern civil law has on the whole adopted the Roman
doctrine. Recently in the United States the introduction of
the Federal Deposit Insurance, which does not apply to loans,
has given the distinction between "loan" and "bank deposit"
a novel and highly practical significance. * * *
The bank deposit (or "bank account") is connected with
the money concept first, by its being a "debt," that is an
obligation to be discharged in money. In addition, there
is another relation between a bank deposit and money
peculiar to the former and distinguishing it from an ordinary
debt. Bank deposits are themselves dealt with as money to
a certain extent. Like money, they serve as stores of value.
The depositor "has his money in the bank." The bank is
supposed to be safe, able and willing to disburse the money,
partly or entirely, at any time on demand, provided there
is no stipulation to the contrary. The risk of the bank's
becoming insolvent is not too seriously contemplated by the
depositor who desires first of all to escape the risk involved
in keeping the money at home. In "depositing" it with a
bank he feels certain that this bank at this time is positively
trustworthy. That trend has been strengthened in the United
States by enforcement of reserve requirements for bank deposits and by the federal insurance of banking accounts up
to $5,000, making such accounts "fungible" and thereby more
money-like. Interest being of secondary concern to the
depositor, the interest rate will remain considerably below
the loan interest rate or disappear entirely.
DEPOSITS IN SAVINGS AND LOAN
ASSOCIATIONS
MAY 26, 1966.
Your question was whether a National bank may
deposit its own funds with a savings and loan association.
In order to reach an answer to this question, it is
necessary to analyze the nature of the claim which
the bank would have against the savings and loan
association after such a transaction. It seems clear,
from the nature of the regulations and laws governing
the manner in which savings and loan associations
are bound to pay claims upon them, that funds invested with such an association may not be considered
as cash upon the balance sheets of the bank. The
only other categories in which such an investment
could be carried would be as a permissible investment
security or as a loan. It seems clear that the transaction would not represent a loan as that term is
defined for the purposes of National bank accounting
and reporting. The only remaining category of asset
to be considered, therefore, is that of a permissible
investment security. If the obligation of the savings
and loan is considered to be an equity security, as
courts and commentators usually describe such obligations, it would not under most circumstances be a
permissible asset for a National bank. This Office
expresses no opinion at this time as to whether or
not all equity securities are per se, impermissible investments for National banks. We do not feel, however,
that an equity security issued by a savings and loan
association is a legal investment for a National bank.
Such obligations are not usually readily marketable
within the requirements of the investment securities
regulation and generally do not meet the standards
of an eligible investment security for a National bank.
DIRECTORS' EXAMINATIONS
JUNE 14, 1965.
In your letter of June 13, 1966, and by the attached
letter from an accounting firm, dated June 10, 1966,
you inquire whether the directors of a National bank
may employ certified public accountants to conduct
audits of the bank on a rotating departmental basis
and whether such rotating departmental audits,
coupled with the banks own internal audits, are sufficient to meet the requirements of this Office.
Paragraph sixth of 12 U.S.C. 24 vests in the board
of directors of a National bank discretionary authority
to conduct the affairs of the bank as the board deems
necessary and expedient to discharge its common law
duty of ordinary care and prudence owed to the shareholders, depositors, and creditors of the bank. There
are no statutory or regulatory requirements governing
directors' examinations, and the proposed schedule
contained in paragraph 41 of "Duties and Liabilities
of Directors of National Banks," a copy of which is
attached hereto, is suggestive and not mandatory.
Therefore, if the board of directors of a National bank
wishes to employ a certified public accounting firm to
conduct a program of rotating departmental audits, it
may do so with the understanding that the directors do
not thereby relieve themselves of their lawful duty to
supervise the conduct of the bank. In this connection,
your attention is directed to paragraphs 38, 39, and 40
of the above-mentioned "Duties and Liabilities of
Directors of National Banks."
EDUCATIONAL LOANS—HIGHER EDUCATION ACT OF 1965
MAY 26, 1966.
Thank you for the opportunity to express the views
of this Office with respect to the treatment of educational loans under title IV, part B of the Higher
Education Act of 1965, Public Law 89-329.
The program to be developed under title IV, part B
was impelled by the concern for financing the spiralling
college costs of all who have a legitimate need. Accordingly, the statute provides, in part, for the next
3 years, a Federal program of insurance of loans to
students who are attending eligible institutions as defined therein. A program of advances of not less than
$25,000 per State is provided to assist the States in
establishing or strengthening the reserve funds of student loan programs which meet specified minimum
standards roughly comparable to the standards embodied in the Federal loan insurance program. In
addition to a plan for insuring the principal of the
loan, the program provides for Federal payments to
reduce student interest costs. There are detailed provisions setting forth the procedures by which an eligible
lender may obtain insurance on a student loan.
235
Section 431 of the act establishes a student loan insurance fund which shall be available without fiscal
year limitation for making payments in connection
with the default of loans insured under part B. Such
insurance fund will be funded with amounts received
as premium charges for insurance and as receipts,
earnings, or proceeds derived from any claim or other
assets acquired by the Commissioner of Education in
connection with operations under part B. In the event
that the insurance fund does not have sufficient money
to make payments, the Commissioner of Education
has the authority to obtain additional money by issuing
to the Secretary of the Treasury notes or other obligations. All redemptions, purchases, and sales by the
Secretary of the Treasury of such notes or other obligations shall be treated as public debt transactions of the
United States.
This Office believes that National banks should
participate fully in this worthwhile program to aid the
college student in meeting the increasing costs of education. It is good government and prudent banking
to aid, in this manner, the educational needs of this
generation. National bank examiners will be instructed to treat student loans properly made under
title IV, part B of the Higher Education Act of 1965
in a manner similarly accorded to FHA title I loans.
COMPOSITION OF THE FDIC BOARD
MARCH 2,
1966.
Hon. ABRAHAM J. MALTER,
Subcommittee on Bank Supervision and Insurance,
House of Representatives, Washington, D.C.:
I greatly appreciate your letter of February 23, 1966,
inviting this Office to present its views on H.R. 12904
(89th Cong., 2d sess.). This bill would amend the
Federal Deposit Insurance Act to remove the Comptroller of the Currency from the Board of Directors of
the Federal Deposit Insurance Corporation.
The FDIC was created in 1933 to provide deposit
insurance out of a fund to be established through
assessments upon insured banks. It was also intended
that the FDIC use the insurance fund to assist weakened insured banks. In addition, the FDIC was empowered to act as receiver of certain closed banks and
to prescribe rules and regulations for the implementation of its various functions. Each of these functions
obviously affects National banks. Therefore, it was
considered necessary for the Comptroller of the Currency to be a director of the FDIC.
236
From its beginning, the FDIC has evolved into a
bank supervisory agency, with great power over State
banks. This has resulted from statutory grants of
broad power over State banks, which over the years
have greatly eroded the dual banking system, and from
the practice of State bank supervisors in requiring
FDIC insurance as a condition of chartering new
banks; thus, making the FDIC, in effect, the Federal
chartering agency for State banks. Consequently,
now the FDIC is not only an examiner and insurer,
but is also the supervisor of State nonmember banks
and, in reality, the charterer of new State banks.
This Office has indicated that it is not appropriate
for the Comptroller of the Currency to take part in
the FDIC's exercise of its supervisory powers over State
banks. Accordingly, to the extent that H.R. 12904
seeks to relieve this Office of the burden of participating in these chartering, examining, and supervisory
powers over State banks, we do not object to the bill.
However, in its role as insurer of bank deposits, the
actions and policies of the FDIC bear critically upon
National banks and State member banks, as well as
State nonmember banks. This Office would be remiss
in the performance of its statutory duties if we did
not point out the need for preserving, at least in the
Comptroller with respect to National banks, an authoritative voice in those functions of the FDIC which
directly and fundamentally affect all banks.
Specifically, we refer to: (1) Interpretation and
application of the statutory definition of deposits; (2)
determination of what constitutes an insured deposit;
(3) determination of classification of time, savings,
and demand deposits; (4) regulations for enforcement of assessments; (5) the use of the FDIC funds
for the assistance of weakened banks; and (6) supervision of National bank receiverships.
The necessity for this Office having a voice in such
matters is underlined by the fact that National banks
represent 33 percent of the banks and approximately
50 percent of the deposits insured by the FDIC and
about 50 percent of the assessments paid to the FDIC.
We believe that H.R. 12904 is defective in its present form. It should be amended so that the consent
of the Board of Governors of the Federal Reserve System and Comptroller of the Currency would be required for changes in existing rules, regulations, or
policies of the FDIC with respect to the foregoing matters, including adoption of new rules and regulations
or amendment of present rules or regulations. In this
way, the interests of all banks would be protected and
the dual banking system would be preserved and fostered. Personnel of this Office are available to work
with members of your staff to develop the appropriate
statutory language.
We also suggest that your hearing on H.R. 12904
presents an appropriate opportunity to inquire into the
scope of the FDIG's responsibility to lend financial
assistance to weakened banks, including the narrow
policy which the FDIG has adopted in this basic area.
The issues underlying H.R. 12904 are of great importance to the National banking system. It is hoped
that this letter will dispel misconceptions concerning
our position in this matter.
The views herein expressed are those of the Office
of the Comptroller of the Currency. The expression
of these views has been authorized by the Secretary of
the Treasury.
INTEREST RATES—STATE LAWS
INDEPENDENT AUDITS
SEPTEMBER 10,
Hon.
1965.
WRIGHT PATMAN,
Committee on Banking and Currency,
House of Representatives,
Washington, D.C.:
This is in reply to your letters of June 8, 1965,
wherein you request to be furnished a report on
H.R. 123 and H.R. 40, bills to require audits, at the
expense of the bank, by independent certified public
accountants or independent licensed public accountants, of each bank insured by the Federal Deposit
Insurance Corporation.
As you know, this Office is required by law to
examine every National bank at least three times in
every 2 years. The scope and depth of our procedures are such that a National bank examination includes most auditing functions. Banks, other than
National banks, are regularly examined by the appropriate Federal or State supervisory authorities, or
a combination thereof. In addition, many banks
maintain, as an integral part of their overall banking
operations, internal auditing departments which are
staffed by qualified and experienced personnel. These
audit departments, which are under the direction of
an officer who is responsible only to the board of
directors, perform a continuing daily audit of the
bank's affairs. The bylaws of National banks provide
for an examining committee comprised of members
of the board of directors whose designated duties are
to make, or cause to be made, periodic examinations
into the affairs of the bank, and to report the results
of such examinations, in writing, to the board of directors at its next regular meeting. Such reports encompass all aspects of the bank's condition, including
particularly, whether adequate internal audit controls
and procedures are being maintained.
This Office, at the time of each examination, reviews
and appraises the adequacy of the bank's audit procedures and internal controls. If such procedures are
found to be deficient, this matter is brought to the
attention of the board of directors for corrective action.
For your information, pages 13 and 14 of the "Report
of Examination" which deal specifically with internal
controls and audit procedures are enclosed.
We are unable to find, after long observation and
careful study, any substantive advantages which would
be gained to justify the additional cost to the banks
if either of the subject bills were enacted.
APRIL 29,
1966.
This is in reference to your letter of April 11, 1966,
requesting a ruling from this Office that your bank
may change interest at the maximum rate permitted
by the Arizona Small Loan Act for advances of credit
up to $1,000 and it will not be subject to other provisions of that act relating to total indebtedness, licensing, class, or size of such loans.
The making of loans is a lawful exercise of a power
of a National bank specifically granted by Congress
in paragraph seventh of 12 U.S.C. 24. National banks
make loans under that authority alone, and the only
limitations with respect to the interest charged on such
loans are contained in the provisions of 12 U.S.C. 85,
which to some extent, incorporate State law as a
measuring rod in determining maximum interest rates.
Under applicable law and relevant court decisions, a
National bank clearly may charge interest at the
maximum rate permitted by applicable State law to
any competing State institution; where State law
permits a higher rate on specified classes of loans, a
National bank may lawfully make loans at this higher
rate subject only to those limitations relating to the
classification of loans which are material to the determination of the rate of interest. A National bank
may lawfully charge the highest rate permitted to any
competitor in the State in which it is located, including
a lender licensed under a State regulatory or small
loan act, irrespective of whether the National bank
is similarly licensed. Any provision in State legislation which purports to prevent a National bank from
the exercise of these or other rights under Federal
law (12 U.S.C. 24 and 85) is inoperative and ineffective.
237
Accordingly, your bank may charge interest at the
maximum rate permitted by the Arizona Small Loan
Act for advances of credit up to $1,000 and it will not
be subject to other limiting provisions of that act.
INTERNATIONAL OPERATIONS
MAY 17, 1966.
Hon. A. WILLIS ROBERTSON,
Committee on Banking and Currency,
U.S. Senate, Washington, D.C.:
In our review of the committee print bill of the
Senate Banking and Currency Committee, dealing
with proposed amendments to the Bank Holding
Company Act of 1956 and related statutes, we have
noted that the committee will consider an amendment
of section 25 of the Federal Reserve Act to authorize
National banks to apply to the Board of Governors
of the Federal Reserve System for permission to make
direct investments in foreign banks not engaged in
activities in the United States.
This Office has long advocated the application of
the principle of direct investment for conducting the
international and foreign business of American banks.
We are pleased to see that the committee will be
considering statutory recognition of this principle.
We have also been concerned that the responsibility
for supervising the international and foreign activities
of National banks has been divided between the Board
of Governors of the Federal Reserve System and the
Comptroller of the Currency. At this time, when
National banks are operating 95 percent of the foreign
branches and conducting a preponderance of the international and foreign business of American banks,
it seems inappropriate to add still another responsibility in this area to the Board of Governors.
We believe that the committee should give consideration at this time to a simple revision of section 25 of
the Federal Reserve Act, as amended, to authorize
National banking associations to file application with
the Comptroller of the Currency for permission to
exercise the powers therein described, including the
new power to make direct investments in foreign
banks. Appropriate language for the amendment of
section 25 is enclosed herewith.
If section 25 were thus revised, the third paragraph
of section 9 of the Federal Reserve Act which already
contains provisions for the establishment of foreign
branches of State member banks could be amended
to authorize such banks to file applications with the
Board of Governors of the Federal Reserve System for
238
permission to exercise their powers to make direct and
indirect investments in international or foreign banks.
Under present law, it is the Comptroller of the
Currency who is charged with responsibility for the
supervision and regulation of virtually the full range
of National bank activities, including the examination
of National bank foreign branches. The authority
granted to the Board of Governors of the Federal
Reserve System by section 25 of the Federal Reserve
Act (which applies directly only to National banks)
results in an undesirable and unnecessary fragmentation of supervisory authority over National banking
associations. It materially dilutes the power of the
Comptroller to achieve optimum supervision of National banks which operate foreign branches and which
conduct international and foreign business. This is
of increasing concern to this Office in view of the
recent and marked acceleration of the international
and foreign operations of National banks. The law, as
it now stands, is but a remanent of a former supervisory scheme in which the Secretary of the Treasury
and the Comptroller of the Currency were members of
the Board of Governors of the Federal Reserve System
and thereby exercised a voice in decisions on matters
affecting the international and foreign activities of
National banks. The Secretary and the Comptroller
are, of course, no longer members of the Board.
While we do not at this time propose any changes
in section 25 (a) of the Federal Reserve Act which provides for federally chartered foreign and international
banking corporations (Edge corporations), we are
studying the establishment, operation, and supervision
of these corporations and expect to have a report and
suggested legislation for presentation to the next
Congress.
LEASING OF PUBLIC FACILITIES
SEPTEMBER 24,1965.
This is in reference to your letter of August 13,1965,
addressed to the Deputy Regional Comptroller of the
Currency which has been forwarded to this Office for
reply, and your telephone conversation of September
15, 1965, with a member of our legal staff. Your inquiry concerns the possibility of a National bank, possibly in conjunction with another National bank,
constructing and financing the acquisition of airport
facilities for two cities which presently own the land
upon which the facilities are to be constructed. It is
anticipated that the two cities would have authority to
pay rental either out of general or special funds in an
amount sufficient to fully amortize the cost of the
facilities within a period of years, probably not to exceed 15, at which time ownership of the facilities would
be transferred to the cities. Such facilities would be
subleased by the cities during the term of their lease to
an airport authority which is in the process of being
formed. You question the adequacy of the revenues
which would come from such authority to retire any
obligations incurred.
A National bank may, under paragraph seventh of
12 U.S.C. 24, finance the acquisition of airport facilities
by several municipalities. As an incident to such
financing, the bank may contract the facilities, retain
title thereto, and lease the facilities under a lease agreement, at the expiration of which the municipalities
will become the owners of the facilities and under the
terms of which the commitment of the municipalities
to make the requisite payment of lease rentals is supported by a power to levy a tax sufficient to produce
annually the necessary funds to pay the lease rental.
An opinion of the bank's counsel should be obtained
with respect to whether the cities possess the requisite
power to enter into such a lease agreement and to levy
the requisite taxes.
LENDING LIMIT—PARENT COMPANY AND
SUBSIDIARY
JANUARY 3,
1966.
This is in reply to your letter of October 18, 1965,
and your recent telephone conversation with a member
of our legal staff, with respect to loans to a company
and its wholly owned subsidiary. The lending limit
of your bank is $70,000, and the bank has extended
direct, unsecured credit to the subsidiary in the amount
of $60,000. You have requested the opinion of this
Office as to whether the bank many extend direct,
unsecured credit to the parent company in the amount
of $60,000.
Although the provisions of 12 U.S.C. 84 concerning
loans to parent and subsidiary corporations generally
requires that such loans be combined in computing
the bank's lending limit of 10 percent of the bank's
unimpaired capital stock and unimpaired surplus
funds, as those terms are defined in paragraph 1100
of the "Comptroller's Manual for National Banks," in
light of the history and purpose of 12 U.S.C. 84, loans
to two corporations where one such corporation is a
majority owned subsidiary of the other corporation
need not be combined if: (1) each such corporation
conducts its own separate business operations; (2)
each such corporation has earnings and net worth
which adequately supports that credit, and upon which
the bank relies in extending credit to it, independent
of and apart from its investment in or subsidiary relationship to the other corporation; (3) the credit extension to each corporation is for the purpose of
supplying working capital or other financial requirements of that corporation and not those of its parent
or subsidiary; (4) neither corporation guarantees or
otherwise assumes any liability or responsibility for the
loans to the other; and (5) the credit extension to each
corporation is separate from and not related to the
extension of credit to the other corporation. In the
absence of any of these circumstances, loans to a
parent and its majority owned subsidiary must be
combined in determining the 10 percent lending limit.
In the situation outlined by you, a substantial portion
of the assets held by the wholly owned subsidiary consists of loans discounted by the parent. The loan
paper originates upon the sale of goods by the
parent in consideration of which the consumer executes a note payable to the parent. As the need for
funds arises, the parent company discounts a specified
amount of the paper with its subsidiary. Such a discounting arrangement imposes a financial relationship
between the two corporations such as to require a
combining of loans to a parent corporation and its
wholly owned subsidiary in applying the 10 percent
limitation of 12 U.S.C. 84. Accordingly, loans made
by your bank to the parent company and its subsidiary
must be combined in applying the 10 percent limitation
of 12 U.S.C. 84.
LOANS FOR PURCHASE OF CONVERTIBLE
BONDS
MAY 27, 1966.
This is in reply to your letter of May 23, 1966, in
which you inquire whether a National bank is precluded by 12 CFR 221 from lending money for the
purpose of purchasing convertible bonds and whether
the bank may advertise loans for the purpose of purchasing convertible bonds. You request my comment
on the proposed advertisement attached to your letter.
Title 12 CFR 221 is applicable only to equity securities and does not apply to debt securities, even to those
with a convertible future. Accordingly, a National
bank may lend money for the purpose of purchasing
convertible bonds and said convertible bonds may be
pledged to secure the loan. At such time as the bondholder elects to convert the bonds into stock, and said
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stock is registered on a national securities exchange,
then the provisions of 12 GFR 221.3 (r) are applicable.
Since a National bank may lend money for the purpose of purchasing convertible bonds, it may, as a
necessary incident thereto, advertise this service to the
public. This Office finds nothing objectionable in the
proposed advertisement attached to your letter.
LOANS SECURED BY UNITED STATES'
OBLIGATIONS
NOVEMBER 22,
1965.
To the Presidents of all National Banks:
The text below, which is from the revised part 6 of
the Regulation of the Comptroller of the Currency (12
CFR 6), relates to loans by National banks secured
by obligations of the United States. The revised regulation, which became effective immediately upon its
publication in the "Federal Register" on November 17,
1965, is authorized by 12 U.S.C. 84(8) and, under
12 U.S.C. 248 (m), is also applicable to State-chartered banks which are members of the Federal Reserve
System.
Prior to this revision, part 6 permitted loans to be
made without any limitation based on the bank's capital and surplus when secured by direct obligations of
the United States, but limited loans which are secured
by obligations which are fully guaranteed both as to
principal and interest by the United States to 25 percent of a bank's capital and surplus. This revised
regulation removes any lending limitation based upon
capital and surplus with regard to loans secured by
obligations fully guaranteed both as to principal and
interest by the United States. This regulation now
provides that:
The obligations to any National banking association of any
person, copartnership, association, or corporation secured by
not less than a like amount (at par or face value) of either
direct obligations of the United States or obligations fully
guaranteed both as to principal and interest by the United
States, shall not be subject to any limitation based upon capital and surplus of the association.
customers. You request the advice of this Office as
to whether the bank's investment in the affiliate is
limited to 10 percent of the bank's capital and surplus;
whether there is a minimum investment requirement;
whether there are limitations as to the type of loans
this affiliate may make and discount with the bank;
whether the affiliate may make loans or leases secured
by equipment and/or other assets, including real
estate equities, and whether there are any limitations
on the amount of such loans; and whether the bank,
in making loans to the affiliate secured by chattels
and leases on equipment, may make loans in the
amount of the actual cost of the equipment or whether
a margin must be maintained, and if so, how much
margin need be maintained.
The bank's investment in the proposed wholly
owned affiliate would be limited by 12 U.S.C. 371c
to 10 percent of the bank's capital and surplus. There
is no minimum investment requirement.
Loans made by the subsidiary, whether or not
discounted with the bank, should conform to the laws
and other requirements applicable to loans made by
a National bank. Under 12 U.S.C. 371c, loans made
by the affiliate and discounted by the bank with
recourse must be included in determining the bank's
investment in such affiliate and in applying the limitation on such investment of 10 percent of the bank's
capital and surplus. Loans to such an affiliate by
the bank must, under 12 U.S.C. 371c, be secured by
collateral in the form of stocks, bonds, debentures, or
other such obligations, including chattels and leases
on equipment, having a market value at the time of
making the loan or extension of credit of at least
20 percent more than the amount of the loan or
extension of credit. Where, however, a loan is purchased from such affiliate without recourse, these
limitations of 12 U.S.C. 371c are not applicable. The
provisions of 12 U.S.C. 84 are applicable to loans made
by the affiliate, including such loans as are secured by
equipment leases and/or other assets. Loans to the
same borrower by the bank and by the affiliate must
be combined for purposes of applying the limitations
of 12 U.S.C. 84.
LOANS TO WHOLLY OWNED AFFILIATE
JANUARY 11, 1966.
Reference is made to your letter of December 3,
1965, which was forwarded to this Office for reply
by our Regional Comptroller. You state that your
bank is considering the formation of a wholly owned
corporation to provide equipment lease and other
types of financing for its depositors and prospective
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MAIL SERVICE
SEPTEMBER 9, 1965.
This is in reply to your letter of August 4, 1965,
in which you ask the opinion of this Office as to the
feasibility of providing mail messenger service to a
prospective customer of your bank. Such service
would be offered in an effort to attract to the bank
a customer who picks up his mail in downtown
Bridgeport.
As is stated in paragraph 7490 of the "Comptroller's
Manual for National Banks," in order to meet the
requirements of its customers, a National bank may
provide messenger service by means of an armored
car or otherwise pursuant to an agreement wherein
it is specified that the messenger is an agent of the
customer rather than of the bank. Moreover, a
National bank may service others with the excess
capacity of the armored-car messenger service it provides primarily for its own customers. A bank which
has such excess capacity may, in accordance with
applicable postal regulations and under an appropriate
agreement, also provide mail delivery service to
prospective customers.
MARCH 8,
1966.
This is in response to your letter of March 3, 1966,
in which you request our advice concerning the operation in the proposed branch of your bank of a postal
contract station for the post office department. You
inquire whether it would be possible for a postal
facility to be serviced by the bank's employees.
A National bank may, as a customer service, provide
postal services and receive compensation therefor.
Such services may include meter stamping of letters
and packages as well as selling appropriate insurance.
National banks may advertise, develop, and extend such
postal services for the purpose of attracting new customers to the bank. However, because title 39 U.S.G.
705 and the postal regulations issued in pursuance of
that statute authorize the Post Office Department to
inspect the books and records of such postal substations, a National bank must take care to insure
that such books and records are kept separate from
those of its other banking operations.
MECHANICAL RECEIPT OF FUNDS
JULY 23
1965.
This is in reply to your letter of April 1, 1965,
requesting the opinion of this Office regarding the
installation by a National bank of a machine formerly
called a speed depositor, now called a saving planner,
in shopping centers near the location of the bank.
The machine, as described in a brochure attached to
your letter and examined recently by members of the
staff of this Office, is an electrical machine which is
operated by the customer, who inserts checks, currency,
and coins, and a numbered duplicate transaction slip
into the machine. A photographic record is made
on microfilm of each receipt and insert item. The
machine then issues to the customer a duplicate transaction slip which provides evidence of the transaction
and states that the transaction will become a deposit
upon verification and crediting at the bank premises.
It is expected that banks which install the machine
will assume responsibility for providing adequate insurance protection under its own insurance bonding
program.
It is the opinion of this Office that a placement of
a "saving planner" off the premises of a bank does
not come within the scope of 12 U.S.C. 36(c) inasmuch as the bank would not accept deposits until
they reach the banking premises. A bank should,
however, take measures to insure adequately the money
received in the machine and should make clear on
the transaction slip that the transaction only becomes
a deposit upon its arrival at the banking house. Of
course, the machine should be placed in the locations
and under the circumstances which are consonant
with the dictates of physical security.
MORTGAGE COMPANY LOAN
SOLICITATION
MARCH 28,
1966.
Reference is made to your letter of February 24,
1966, in which you state that your bank is considering
a proposal from a mortgage investment company to
solicit personal loans from its customers on behalf of
the bank. You request a ruling from this Office in
regard to certain questions relating to the above mentioned proposal in light of your State's branch banking laws.
Your first question is whether the mortgage company, with five scattered offices in your State, may
solicit unsecured personal loans from its mortgage loan
customers on behalf of the bank as its various offices.
Because every loan application would be submitted
to the bank for approval, the mortgage company's
offices would not be making loans. Accordingly, the
proposal would not be in contravention of the branch
banking laws applicable to National banks. Moreover, it would be permissible for the mortgage company to maintain a supply of credit applications and
note forms of the bank in its offices.
Question two relates to the submission by mortgage
company employees of credit applications to the bank
for approval or disapproval. If approved, promissory
notes running directly to the bank would be filled out
241
by the mortgage company's employees for the signatures of the borrowers and submitted fully executed
to the bank. Upon receipt in satisfactory form, the
bank would then disburse the loan proceeds directly
to the borrowers. As stated in the reply to question
one, since the loan applications would be submitted
to the main office of the bank for approval, the mortgage company's offices would not be making loans
and, therefore, the processing of such applications
by employees of the mortgage company would not
constitute a violation of the branch banking laws.
NATIONAL BANK AS GUARANTOR
MAY 5, 1966.
This refers to your letters of April 8, 1966, and the
enclosed materials relating to a request by your bank
for permission to issue privilege cards to employees
of a corporate customer so that such employees may
cash payroll checks up to the amount of $250 at
various supermarkets and retail stores which are also
customers of the subject bank. The privilege card
to be issued to the employees of the corporate customer
would bear the corporate title of the customer, the
employee's name, and the corporate account number.
Under the proposed plan, the bank would, in essence,
act as a guarantor of the payroll checks drawn by its
corporate customer and cased by employees at participating stores.
You were advised in our conference of April 8, 1966,
that the inquiry would be referred to the Comptroller's
Office in Washington, D.G., for final determination.
This Office has been notified by the Comptroller's
legal department and, as is stated in paragraph 7010
of the "Comptroller's Manual for National Banks,"
a National bank generally may not lend its credit or
become a guarantor on an obligation or bind itself
as surety to indemnify others in the event of loss,
unless it has a substantial interest in the performance
of the transaction involved. It is the opinion of the
Comptroller's Office that a National bank has a sufficient interest in facilitating the .cashing of checks
drawn on it by its customers so that it may, under its
corporate powers as enumerated in paragraph seventh
of 12 U.S.C. 24, enter into agreements with various
supermarkets and retail stores to guarantee checks
drawn upon it and cashed in accordance with established procedures such as outlined in your letters, with
enclosures, of April 8, 1966.
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NATIONAL BANK STOCK SALES—BYLAWS
MAY 27, 1966.
In your letter of May 26, 1966, you advise that a
State-chartered bank has incorporated on the face of
its stock certificates a provision that the stock must
be transferred on the books of the corporation by the
holder thereof upon surrender of the stock certificate
properly endorsed and in compliance with the conditions contained in a certain bylaw of the bank. You
advise me that the said bylaw requires the holder of
the stock to offer it to certain officials of the bank
for sale before offering it to the public. You inquire
whether a National bank may adopt bylaws governing the transfer of stock in this manner and whether
such bylaws may be incorporated by reference on the
face of the stock certificate.
Paragraph sixth of 12 U.S.C. 24 empowers a
National bank "to prescribe, by its board of directors,
bylaws not inconsistent with law, regulating the
manner in which its stock shall be transferred * * *."
Moreover, as evidenced by 12 U.S.C. 52, a National
bank has broad discretionary authority to specify the
rights, powers, limitations, and restrictions of classes
of stock. However, the broad discretionary authority
to specify the rights, powers, etc., of stock ownership
and to prescribe bylaws governing the procedure for
transferring stock is not absolute, but is subject to
the rule that the bank may not impose procedures
which are unreasonable or which place an unreasonable restraint on the right of alienation. In this connection, your attention is directed to Fletcher Cyclopedia Corp. section 4191 and the cases contained in
the annotations under 12 U.S.C.A. 51, footnote 8.
Construing your inquiry in the light of the above
general considerations of law, I conclude that a
National bank may prescribe in its bylaws and incorporate on the face of its stock certificates a provision
requiring the holder of the stock to offer it to the
management of the bank before offering it to the
public. Such a provision, in this Office's opinion, is
neither an unreasonable restraint on the alienation
of personality nor inconsistent with law.
PREEMPTIVE RIGHTS
JULY 26,
1965.
This is in reply to your letter of June 25, 1965, in
which you inquire about the best procedure to follow
in order to sell shares in your bank to new stockholders. You further inquire if newly issued stock,
subject to the preemptive rights of shareholders and
not subscribed to by the shareholders entitled to them,
must be reoffered to those shareholders who did
exercise their preemptive rights, before the shares may
be sold to the public. Moreover, you suggest that
paragraphs 7.6 and 14.2 of the Comptroller's regulations would permit the bank to avoid the preemptive
rights of stockholders by the execution of an agreement to this effect, between the bank's directors and
the Comptroller of the Currency.
It is general corporate law that the shareholder must
be given a reasonable time within which to exercise
his preemptive right. At the end of such time, such
right is extinguished and the bank is free to sell the
shares to other persons. It is not necessary for the
unclaimed shares to be offered to other stockholders.
Paragraph 7.6 of the Comptroller's regulations
provides that approval of two-thirds of the voting
stock is necessary for a National banking association
to adopt articles of association or extend existing
articles of association in order to modify or eliminate
preemptive rights. Paragraph 14.2 of these regulations provides that authorized but unissued stock may
be issued for such purposes as may be approved by the
board of directors of the bank and by the Comptroller.
However, it is necessary to acquire a favorable vote
of two-thirds of the voting stock before stock may be
issued without recognition of existing stockholders'
preemptive rights.
If it is believed that the shares which would become
available as a result of the failure of stockholders to
exercise their preemptive rights are not sufficient to
satisfy the needs of the bank in furtherance of its
goal of acquiring new stockholders, we suggest that
you amend your articles of association pursuant to
paragraph 7.6, so as to partially or totally waive preemptive rights on sufficient authorized shares to meet
your needs.
JULY 27,
1965
Reference is made to your letter of June 17, 1965,
in which you inquire as to the basis for this Office's
interpretation, as expressed in regulation 7.6, that any
article of association, or amendment thereto, which
modifies or eliminates preemptive rights of stockholders must be approved by the holders of two-thirds
of the voting stock of a National banking association.
You ask that this provision be reconciled with 12
U.S.C. 21a which provides that the articles of association of a National bank association may be amended
by the approval of a majority of the voting stock of
associations.
Prior to the issuance of ruling 7.6, it had been the
position of this Office that the articles of association
could not be amended so as to eliminate or modify
the preemptive rights of existing shareholders. In the
absence of any Federal statutes on the subject, similar
to those contained in most State corporation laws, this
Office has since taken the position that the rights of
existing stockholders would be adequately protected
by a requirement for a two-thirds affirmative vote of
any amendment effecting their preemptive rights.
This is consistent with provisions such as 17 U.S.C.
57 and 59 which require a two-thirds vote for other
amendments which affect the rights of stockholders.
PROMISSORY NOTES
DECEMBER 16,
Hon.
1965.
WRIGHT PATMAN
Committee on Banking and Currency,
House of Representatives,
Washington, D.C.:
This is in reference to your letter of November 19,
1965, challenging our position that unsecured shortterm notes issued by National banks pursuant to paragraph 7530 of the "Comptroller's Manual for National
Banks," constitute excepted indebtedness under 12
U.S.C. 82.
It is apparent to us from a careful reading of the
legislative history and the decided cases under 12
U.S.C. 82, that the intent of the section is to except
from the ceiling on indebtedness, obligations incurred
by a bank in the ordinary course of its banking business. The exception of such obligations is, of course,
dictated by commonsense considerations. Obviously,
a bank could not conduct business if it were limited
on the total amount of deposits it could take to an
amount equal to its capital and half of its surplus.
Similarly, it would be disabled from carrying on normal banking functions if the other excepted categories
of obligations, such as bills of exchange, obligations
to Federal Reserve banks, or short-term notes were restricted by such a ceiling.
When this Office first recognized the power of National banks to issue short-term unsecured notes in
September 1964, it could not have been said that such
notes represented an ordinary-course-of-business banking instrument. It was, therefore, our position, as
contained in paragraph 7530 of our manual, that the
total of such notes issued by any one bank, when added
to other outstanding known excepted indebtedness,
could not exceed the statutory limitation. In the 16
243
months following the issuance of our ruling, the shortterm note has received wide acceptance as a moneymarket instrument and is now generally regarded in
banking circles as an ordinary-course-of-business
instrument.
Contrary to the statement contained in your letter
that the courts have traditionally strictly construed 12
U.S.C. 82, our reading of these cases indicates that the
courts which have been called upon to construe this
section, have liberally interpreted it, so as to promote
and not to impede the normal method of operation of
banks. See Weber v. Spokane National Bank, 64 Fed.
Rep. 208.
Accordingly, we have revised paragraph 7530 for
the Comptroller's Manual to indicate that negotiable
or nonnegotiable promissory notes issued by a National
bank in the ordinary course of its banking business
for the purpose of obtaining working funds to be used
in making loans and the performance of other ordinary
banking functions, represent liabilities of the nature
excepted from the provisions of 12 U.S.C. 82 and that
such notes may be issued without regard to the overall
ceiling on indebtedness contained in that section.
National banks, it is no longer open to doubt that a
State, by a procedure satisfying constitutional requirements, may compel surrender to it of deposit balances
when there is substantial ground for belief that they
have been abandoned or forgotten.
However, since the Anderson decision, supra, this
Office has refrained from expressing its opinion as to
whether an escheat statute of a particular State is
binding upon a National bank situated in such State.
Consequently, the board of directors of your bank must
determine, with advice of counsel, whether the New
Hampshire statute is binding upon the bank.
If it is concluded that the New Hampshire statute
is binding upon your bank, then under the Anderson
decision, supra, the State of New Hampshire may require the bank to file reports concerning its abandoned
accounts. It should be noted, however, that such requirement is not tantamount to a right of the State of
New Hampshire to also examine the records of a National bank as to its abandoned accounts. Such a
right is vested solely in the Office of the Comptroller
of the Currency as provided in 12 U.S.C. 484 and as
is stated in paragraph 6025 of the "Comptroller's
Manual for National Banks."
STATE ESCHEAT LAWS
MARCH 17,
1966.
Receipt is acknowledged of your letter dated March
8, 1966, in which you enclosed a copy of an excerpt
from a recently enacted New Hampshire statute which
requires financial organizations, including National
banks located in New Hampshire, to notify and pay
over to the State, deposits held by the bank and presumed to be abandoned. You state that it was the
bank's impression that a National bank was not subject to State statutes concerning the custody and
escheat of unclaimed property.
Your attention is directed to Anderson National
Bank et al. v. Luckett, Commissioner of Revenue, et al.,
321 U.S. 233, U.S. Supreme Court decision of 1944,
in which it was held, concerning a State statute which
appears to be analogous to the recently enacted New
Hampshire legislation, that the State statute (referred
to in the aforementioned cited case) did not deprive
the depositor of the bank of property without due process of law. The Court further stated that the deposits
are debtor obligations of the bank, incurred and to be
performed in the State where the bank is located, and
hence subject to the State's dominion. The Supreme
Court held that, apart from legal questions which may
arise under the National banking laws in the case of
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STATE TAXES ON NATIONAL BANKS
DECEMBER 17,
1965.
In your letter of December 14, 1965, you state that
your bank is compelled to pay the following State
taxes:
(1) A documentary stamp tax; i.e., the placing of
documentary stamps on each note received from your
borrowing customers;
(2) A 3-percent sales tax charged to the bank by
the State for various purchases;
(3) A mortgage intangible tax charged to the bank
by the State on every mortgage that the bank records;
and
(4) A display tax on any billboards that the bank
erects. You state that the bank's shareholders are
already subjected to a lawful intangible personal property tax on the bank shares that they own, and you
are of the opinion that the above-enumerated taxes
are in contravention of 12 U.S.C. 548. You request
this Office's opinion.
Title 12 U.S.C. 548 permits a State (or political
subdivision thereof) to tax a National bank on its
real estate to the same extent, according to its value,
as other real estate is taxed, and in addition thereto,
in only one of the following four manners, to wit:
(1) A tax on the shares of the bank; or (2) a tax on
the dividends derived from the bank's shares included
in the taxable income of the owner or holder of such
shares; or (3) a tax on the net income of the National
bank; or (4) a tax according to or measured by the
bank's net income. Therefore, any State taxes levied
on and collected from a National bank, which do not
comply with those specifically enumerated in 12
U.S.G. 548 are in contravention of the Federal statute
and unconstitutional. In this connection, your attention is directed to the numerous cases cited in the
annotations contained in 12 U.S.C.A. 548, footnotes
31, 32, 33, 34, 35, 38, 61, 62, and 63.
With respect to the various State taxes levied on
and collected from your bank, it has been the understanding of this Office that such taxes were in reality
levied on the bank's customers and collected by the
bank and remitted to the State by the bank as the
customers' agent. This Office is advised, however,
that this understanding may be incorrect. It appears
that section 201.01 of the Florida statutes imposes
liability for taxes on notes and other evidences of
debt on the person who makes, signs, executes, issues,
sells, etc., such notes and evidences of debt as well
as on the person for whose benefit or use the same are
made, signed, executed, etc. Apparently the State
can collect the tax from the maker or from the holder
of notes and other evidences of debt. In such a case,
the bank as holder could be held liable for the tax.
This interpretation may be supported further by section 201.11 of the Florida statutes which purports to
vest in State officials authority to enter on the premises
of National banks as taxpayers to inspect the books
and records for evidence of payment of taxes. Section 212.01 et seq. of the Florida statutes imposes
sales and use taxes on the sale, rental, or transfer of
certain property; section 212.07 makes the sales or
use tax the debt of the purchaser or consumer. It
seems that the bank, therefore, can be treated as liable
for the payment of such sales and use taxes. Section
199.11 of the Florida statutes imposes intangible personal property taxes on mortgages and prohibits the
recording of a mortgage unless such tax is paid.
Whether the tax is imposed on the mortgagor or the
bank as mortgagee is not clear.
Although the foregoing opinions represent the best
judgment of this Office, they are not binding upon
the State of Florida. If the State continues to impose these taxes upon your National bank and the
bank, on the advice of legal counsel, resists the same
and claims refunds for taxes previously paid, the
question of liability for the tax must be resolved in
the Federal courts as a Federal issue. With respect
to claiming tax refunds from the State, the procedures
and statutes of limitations of State law may be applicable. See U.S.G.A. 548, footnotes 301-314, 341-349.
Regarding the question of paying taxes alleged to be
due and to filing for tax refunds, the board of directors should seek legal counsel's advice as to the directors' liability, if any, to shareholders for the payment of unlawful taxes and the failure to demand
tax refunds. In the event of litigation in this matter
of State taxation of National banks, please advice this
Office, and, at that time, we will consider whether
or not to intervene or otherwise appear in the action.
If, however, notwithstanding the foregoing, your
National bank desires to pay certain State taxes, alleged to be due, as a civic gesture, your attention is
directed to paragraph 7480 of the "Comptroller's Manual for National Banks." If the board of directors of
your National bank determines, in the exercise of
prudent banking judgment, that it wishes to pay certain State taxes, alleged to be due, as a contribution
to community development, the Office would not object to its doing so. It is, however, suggested that if
payment is made, appropriate steps should be taken
to preserve the rights of the bank under 12 U.S.G.
548 for future use, if necessary or desirable.
STOCK OPTION AND PURCHASE PLANS
DECEMBER 31,
1964.
To the Presidents of All National Banks:
Since the passage of the recent amendments to the
Internal Revenue Code dealing with the subject of
employee stock option and stock purchase plans, many
banks have expressed interest in adopting employee
stock option or stock purchase plans which might not
qualify for the special tax treatment afforded to restricted and qualified stock option plans and to stock
purchase plans meeting the definitions contained in the
code.
Employees and banks operating under a nonqualified plan presumably would be subject to taxation in
the usual manner on transactions entered into pursuant
thereto. This Office perceives no consideration of
public policy which should prevent the management
of a National bank, desiring to adopt a nonqualified
plan, from doing so on the basis of the same business
245
and competitive conditions which govern the actions
of business corporations generally in this area.
Accordingly, we have amended our regulations this
date, a copy of which is attached, to eliminate as a
prerequisite to the approval of this Office, that stock
option or purchase plans must qualify under the Internal Revenue Code of 1954, as amended. In place
of the former requirements, a set of general guidelines
for obtaining approval of this Office for plans, is contained in the amended regulations.
DEPARTMENT OF THE TREASURY
COMPTROLLER OF THE CURRENCY
[12 CFR Part 13]
EMPLOYEE STOCK OPTION AND STOCK PURCHASE PLANS
PART 13—EMPLOYEE STOCK OPTION AND STOCK PURCHASE
PLANS
This amendment issued under authority of R.S. 324, et seq.,
as amended, 12 U.S.C. 1, et seq., permits National banks,
desiring to do so, to adopt employee stock option or stock
purchase plans which do not qualify for special tax treatment
under the Internal Revenue Act. Since the amendment relieves restriction, notice and public procedure are found to be
unnecessary and contrary to the public interest. Accordingly,
this amendment will become effective on publication.
Part 13, chapter I, title 12 of the Code of Federal Regulations of the United States of America is amended by revising
section 13.1 to read as follows:
Section 13.1 Scope and application. Any National bank
may grant options to purchase, sell, or enter into agreements
to sell, shares of its capital stock to its employees, whether
or not such transactions qualify for special tax treatment
under the Internal Revenue Code of 1954, as amended, and
regulations promulgated thereunder, provided that the following conditions are met:
(a) Application for approval shall be made to the Comptroller of the Currency, Washington, D.C. 20220, in the form
of a letter accompanied by the following information:
(1) A description of all material provisions of the plan.
(2) Proposed notice of shareholders' meeting, proxy, and
proxy statement.
(3) Number of shares of authorized but unissued stock
to be allocated to the plan.
(4) Proposed amendments to articles of association creating authorized but unissued stock and eliminating
preemptive rights as to the shares reserved under
the plan;
(b) The plan is administered by a committee, none of
whose members may participate in the plan;
(c) The number of shares allocable to any person under
the plan is reasonable in relation to the purpose of the plan
and the needs of the bank; and
(d) In the case of a stock option plan, the number of
shares subject to the plan is not unreasonable in relation to
the bank's capital structure and anticipated growth.
246
SURPLUS FUNDS—DEFINITION FOR
DIVIDEND PURPOSES
SEPTEMBER 21,
1965.
Reference is made to your letter of August 11, 1965?
in which your bank requests the permission of this
Office to consider the words "surplus fund" in 12
U.S.C. 60, relating to payment of dividends, as having
the same meaning as the phrase "unimpaired surplus
funds" described in the "National Banking Review"
(Sept. 1964, p. 93). The policy underlying our interpretation of the phrase "unimpaired surplus funds"
for purpose of 12 U.S.C 24, 36(c), 82, 84, 371, and
371c does not warrant an extension of such an
interpretation to include situations involving payment
of dividends by a National bank. Accordingly, the
amount of a National bank's surplus fund for purposes of 12 U.S.C 60 must be computed without
regard to, among other things, unearned income,
valuation reserves for loans and securities, reserves for
contingencies, other capital accounts to the extent subject to known specific charges, and paid-in surplus in
the case of new banks.
TRUST ACTIVITY—STATE LICENSING
JUNE 29,
1966.
It has been brought to our attention that the Florida
Securities Commission is attempting to impose the
licensing requirements of chapter 517 of the Florida
statutes on the trust department of a National bank
in Florida in reference to the bank's investment advisory services rendered in connection with its investment management agency accounts. You allege that
such investment advisory services may not be performed by said bank until it is properly registered to
act as an investment adviser under State law.
It is a fundamental proposition of constitutional law
that the instrumentalities of the Federal Government
are immune from the interferences of State and local
governments and that National banks as Federal instrumentalities are necessarily subject to the paramount authority of the United States. It follows that
an attempt by the State to define National banks*
duties or control the conduct of their affairs is absolutely void, whenever such attempted exercise of
authority expressly conflicts with the laws of the United
States or either frustrates the purpose of Federal law
or impairs the efficiency of National banks to discharge
the functions for which they were created.1
A National bank derives its authority to engage in
the trust business from 12 U.S.C. 92a, subsection (a)
of which reads as follows:
The Comptroller of the Currency shall be authorized and
emplowered to grant by special permit to National banks
applying therefor, when not in contravention of State or
local law, the right to act as trustee, executor * * * or in
any other fiduciary capacity in which State banks, trust
companies, or other corporations which come into competition with National banks are premitted to act under the laws
of the State in which the National bank is located.
The U.S. Supreme Court has construed the words
"when not in contravention of State or local law" to
mean that whatever may be the State law, National
banks having the permit of the Federal Government
may act in whatever fiduciary capacity a State bank,
trust company, or other competing corporation may
act in.2 Since a State bank may act in the fiduciary
capacity of investment management agent under section 660.01 of the Florida statutes and can secure the
permit to offer investment advice in connection therewith by registering under chapter 517 of the Florida
statutes, the Federal statutory and regulatory requirements are met and a National bank need not obtain
any additional license from the State to so act, its sole
license being the permit granted by this Office under
12 U.S.C. 92a. Even if a State bank were not permitted to render investment advisory services under
State law, this Office would deem such services to be
a necessary incident to operating a trust department
and permissible for a National bank under its incidental powers provided for in paragraph Seventh of
12 U.S.C. 24.
In order that our position may be clearly understood, we wish to advise that this Office will assist National bank trust departments in Florida to
resist the imposition of State licensing requirements
in contravention of the paramount Federal law and
has undertaken to advise National banks in Florida of
this position.
1
Davis v. Elmira Savings Bank, 161 U.S. 283 (1896).
First National Bank v. California, 262 U.S. 368, 369, 370
(1923). Anderson National Bank v. Luckett, 321 U.S. 248
(1944). Mercantile National Bank v. Langdeau, 371 U.S.
558, 559 (1963). See also Sperry v. Florida Bar, 373 U.S.
383,384,385 (1963).
a
Burnes National Bank v. Duncan, 265 U.S. 17(1924).
TRUST OFFICES AND BRANCH LAWS
MAY 16, 1966.
This is in reply to your letter of April 29, 1966,
wherein you inquire whether a National bank with
trust powers may establish an office solely for the purpose of conducting trust business in a community
where such National bank has no other banking
facility.
You state that there is a savings bank and a commercial bank located in the community where your
bank proposes to establish the aforementioned office
and because of the provisions of your State, which
provide "home office protection," you have reservations whether the establishing of such an office would
be legal.
In addition, if such operation is permissible, you
solicit our advise as to the form, method, and procedure of application.
It is the determination of this Office that the proposed trust office would not be a separate branch
pursuant to 12 U.S.C. 36(f) which defines a branch
to include any branch bank, branch office, branch
agency, additional office, or any branch place of business at which deposits are received, or checks paid, or
money lent. This determination is based on the facts
related in your letter of April 29, 1966, which clearly
states that the proposed office would be established
for the conducting of trust business only and it should
not be assumed that this Office is granting permission
to the bank to exercise any of the powers enumerated
in 12 U.S.C. 36 (f) at the proposed office.
TRUST SERVICES—BANKS AND BAR
ASSOCIATIONS
DECEMBER 22,
1965.
To the Presidents of AH National Banks:
Within recent weeks, the attention of this Office has
been directed to agreements between and among banks
and local bar associations adopted generally under
pressure from bar associations, which relate to the division of services in the administration of trusts and
estates.
Agreements of this nature tend to restate or to define more clearly the law of the State pertaining to
alleged unauthorized practice of law by bank trust
departments and trust companies or their officers, and
they are generally unobjectionable to the extent that
they tend to eliminate the probability of interprofessional lawsuits and the concurrent expense which can
247
represent an unnecessary drain on a bank's resources;
and they can benefit the recipient of trust services by
preventing duplication of tasks and charges.
However, it must be emphasized that no agreement
or understanding may be entered into by any National
bank with one or more other banks, or bar association
or similar group of lawyers, which binds a bank to a
common set of fees or charges, or to any arrangement
or understanding which is aimed at or has the effect of
unreasonably restraining the free and competitive exercise of fiduciary functions of National banks. Any
such agreement is in clear violation of the foregoing
rule.
The existence of such fee-fixing and other types of
restrictive agreements by National banks is in violation of the regulation promulgated in 12 CFR 7.2,
which, although relating specifically to service charges,
makes clear that any charge made by a bank must be
determined as a result of unilateral action by the bank,
set forth in a corporate resolution of record and complied with in full. It is, therefore, incumbent on the
board of directors of each National bank to reexamine
its fees and charges for trust services, to be certain that
they have been arrived at independently and without
agreement, arrangement, consultation, or understanding, with any other bank. It should be equally clear
that a bank has no right to bind its customers to the
fee schedule of another profession. In the next and
subsequent examinations, examiners are instructed to
see to it that these instructions are complied with
fully.
Any National bank which has entered into agreements of the type described herein may, if doubt
exists as to their legality, submit them to this Office
for an opinion. If violative of the regulation, they
should be expressly disavowed of record by action of
the board of directors.
TIME DEPOSIT COMPETITION
FEBRUARY 2, 1966.
Hon. WRIGHT PATMAN,
Joint Economic Committee,
Washington, D.C.:
You have requested in your letter of February 1,
1966, that this Office supply the Joint Economic Committe with a legal opinion as to the propriety of
commercial banks issuing negotiable certificates of deposit, their treatment of the funds received thereby
as time deposits, and the issuance of promissory notes.
Section 24, title 12 of the United States Code (par.
seventh) empowers National banks to engage in the
248
business of banking, including specifically the receipt
of deposits. National banks for over 100 years have
exercised this authority by receiving deposits and issuing evidences of such receipt in the form of transferable and negotiable certificates. Indeed, even in
these times this is the only form of evidence of time
deposits issued by National banks and other commercial banks in certain areas of this country. To our
knowledge, the authority for National banks to issue
such instruments has never been seriously contested.
Similarly, there is no question that some received by
the bank for a time certain and net withdrawable at
the demand of the depositor are time deposits. The
fact that the certificates of deposits are negotiable does
not change the character of the time deposit contract
with the bank.
With respect to the issuance of promissory notes,
we again refer to section 24, title 12 of the United
States Code (par. seventh) and also to Congress
recognition of the power of National banks to incur
indebtedness in 12 U.S.C. 82. Since the inception of
the National banking system it has been recognized
as a "necessary incident" to the business of banking
that banks have the authority to borrow money. See
for example: Aldrich v. Chemical National Bank, 176
U.S. 618, 20 S. Ct. 498, 44 L. Ed. 611 (1900);
National Bank of Commerce v. National Bank, Fed.
Cas. No. 18, 310 (Mo. 1878); Charlotte First National Bank v. National Exchange Bank, 92 U.S. 122,
23 L. Ed. 679 (1875); Western National Bank v.
Armstrong, 152 U.S. 346, 14 S. Ct. 572, 38 L. Ed. 470
(1894).
In the case last cited, Mr. Justice Shires, speaking
for the court, set forth the derivation of a National
bank's right to incur indebtedness and issue notes
evidenting such indebtedness as follows:
The power to borrow money or to give notes is not expressly given by the Act. The business of the bank is to
lend, not to borrow, money: to discount the notes of others,
not to get its own notes discounted. Still, as was said by
this court, in the case of First National Bank of Charlotte v.
National Exchange Bank of Baltimore, 92 U.S. 127 (23:
681). Authority is given in the Act to transact such a
banking business as is specified, and all incidental powers
necessary to carry it on are granted. These powers are such
as are required to meet all the legitimate demands of the
authorized business, and to enable a bank to conduct its
affairs, within the scope of its character, safely and
prudently. This necessarily implies the right of a bank to
incur liabilities in the regular course of its business as well
as to become the creditor of others.
One of the primary purposes of the National Currency Act which created the National banking system
was to provide for the issuance of circulating bank
notes issued by such banks. Indeed, the historic basis
for the borrowing power of American banks may be
found in the practice of the English banks prior to the
origination of the National banking system.
The very first banking in England was pure borrowing.
It consisted in receiving money in exchange for which
promissory notes were given payable to bearer on demand,
and so essentially was this banking as then understood, that
the monopoly given to the Bank of England was secured
by prohibiting any partnership of more than six persons
"to borrow, owe, or take up any sum or sums of money on
their bills or notes payable at demand."
Auten v. U.S. National Bank, 174 U.S. 125, 142.
In conclusion then, it is unquestionably within the
power of National banks to issue promissory notes as
evidence of their borrowing, to issue negotiable certificates of deposits, and to treat the sums received
therefore as time deposits.
JUNE 2, 1966.
Hon. WRIGHT PATMAN,
Committee of Banking and Currency,
House of Representatives,
Washington, D.C.:
We appreciate the opportunity to comment on these
proposals. As you know, I have opposed all legislation
in this area on the grounds that there is no danger or
problem of sufficient magnitude to justify the additional restrictions which these measures would impose.
It simply does not seem wise to continue to protect
the savings and loan industry from the competitive
pressures of other financial institutions. In addition,
if the Congress judgment is that we should subsidize
the housing market, I believe there are ways which
are more direct and efficient, and which would provide more assurances that funds would flow into those
specific kinds of housing which we wish to expand.
Since it is not clear that these proposals will accomplish
anything worthwhile, and since it is abundantly clear
that they will further impair the efficiency of our financial system, I remain opposed to this kind of market
interference.
The first proposal specified in your letter—to raise
the reserve requirements on time deposits—would not
acccomplish anything other than making time deposits
less profitable to commercial banks. Banks would still
accept time deposits and interest rates would still be
determined by the market. Banks, just like savings
and loan associations, would still have to compete for
funds with other financial institutions, as well as with
various money market instruments. Savings and loan
associations already possess artificial advantages, such
as tax benefits, in this competition. It would not seem
to be in the public interest to saddle commercial banks
with additional disadvantages, which they will have
to live with forever after, in order to solve a temporary
problem of the savings and loan industry.
In addition, the level of reserve requirements does
not, of course, have anything to do with bank solvency.
The sole function of reserves is to facilitate monetary
policy, and the correct level of reserves is a function
of economic conditions and monetary policy objectives. Thus, this proposal would have the further
drawback of confusing monetary policy tools and objectives with the competitive relationships among
financial institutions. This kind of confusion is exactly
the problem the Federal Reserve encountered in
December when it raised the Regulation Q ceiling.
By raising reserve requirements on time deposits we
will create even more confusion and uncertainty than
exists now. Increased reserves on time deposits will
also immobilize a larger part of bank assets and, therefore, restrict their lending capability, which will reduce
the volume of loans and tend to increase interest rates.
Not many years ago, in fact, the Commission on
Money and Credit recommended just the opposite of
this proposal:
The Commission believes it is unnecessary to require
statutory reserves against savings and time deposits in banks
and competing institutions. * * * The Commission recommends that existing statutory reserve requirements on time
and savings deposits be repealed, * * *
I believe that the Commission was correct and, therefore, am against raising reserve requirements on time
and savings deposits.
The second proposal you advance is not entirely
clear to me. If it would simply impose a minimum
maturity on time deposits and would not interfere
with the negotiability of these deposits, it would have
some impact on the CD market, but would probably
not wipe out this market.
On the other hand, if the second proposal is intended to make all time deposits nonnegotiable for at
least 6 months, it would virtually abolish the negotiable CD. No investor will wish to buy a CD which
he cannot liquidate for 6 months. As money market
instruments go, 6 months without liquidity is a very
unattractive investment. This proposal, therefore,
will eliminate an attractive money market instrument
for investors and, as a result, make it increasingly difficult for banks to meet their liquidity needs. Banks
will lose the flexibility which they need to meet
vicissitudes in market conditions.
The third proposal—to provide a maximum rate
249
of 4^2 percent on time deposits of less than $100,000—
is just another variation of Regulation Q, except that
it would aggravate the existing discrimination against
small savers. As you know, I have on many occasions
expressed my opposition to using Regulation Q to
regulate competition among financial institutions.
This proposal is even worse in that it allows discrimination on the basis of the depositor's wealth in
regulating prices banks can pay.
One important aspect of all these proposals must be
noted. If these proposals are successful in relieving
savings and loan associations from competitive pressure, they can do so only by encouraging the outflow
of funds from commercial banks, particularly funds
invested in CD's. While I am confident that the
liquidity position of National banks is very sound,
allowing the banks to face even abnormal attrition of
deposits, some of the proposals that have been advanced would have very drastic effects on bank
liquidity and money market conditions. If, for example, negotiable CD's were outlawed and a 6-month
minimum maturity for time deposits imposed, literally
billions of dollars of CD's could not be renewed and
this outflow would greatly reduce bank reserves. Not
only would the effect on many banks be drastic, but
conditions in the money and credit markets would
become extremely tight and chaotic. The financial
structure of this country is strong and resilient. It
can withstand even sizable shocks, but there is, of
course, some limit beyond which we cannot safely go.
The effects of some of these proposals could be very
serious. I strongly urge that the committee consider
these possible effects carefully before taking action.
This is an area in which hasty, ill-considered action
can have drastic repercussions—the side effects of the
medicine may be much worse than the disease.
In regard to housing, if the Congress decides that
the traditional processes of a competitive market place
should not decide what amounts of funds should be
allocated to each sector of the economy, but decides
that housing should receive special consideration, I
would favor a plan which would encourage all financial institutions equally to allocate more funds into
housing. For example, we could allow commercial
banks to have a "tax-free loan loss reserve" on real
estate loans similar to that now enjoyed by savings
and loan associations. If commercial banks, instead
of a 2/2 percent "reserve" account, could keep a
"reserve" account of 12 percent of real estate loans,
as do savings and loan associations, banks would be encouraged to put a larger volume of their funds into
the housing market. This kind of solution would at
250
least avoid the pitfall of "overbuilding" which could
result from an indiscriminate flow of funds into savings and loan associations.
In summary, I am opposed to all three proposals
on the grounds that they represent unnecessary interferences with competitive market processes, thereby
reducing the efficiency of our financial system and
hindering the efficient allocation of our resources.
UNDERWRITING
JANUARY 27,
Hon.
1966.
PAUL H. TODD, Jr.,
U.S. House of Representatives,
Washington D.C.:
This is in reply to your letter of December 3, 1965,
in which you request a nontechnical analysis of the
statutory authority under which this Office issued its
authorization for National banks to deal in, underwrite, and purchase for their own account bonds issued
by the Port of New York Authority.
Under the provisions of paragraph seventh of 12
U.S.C. 24, National banks are empowered to deal in,
underwrite, and purchase without limitation those
securities which constitute general obligations of a
State or political subdivision of a State. The Investment Securities Regulation (12 CFR 1), which was
issued under the provisions contained in 12 U.S.C. 24,
and which became effective September 12, 1963, restates and clarifies the authority of National banks to
purchase investment securities and to deal in, underwrite, and purchase general obligation bonds. Under
this regulation, the term "political subdivision of any
State" is defined to include a county, city, town, or
other municipal corporation, a public authority, and,
generally a publicly owned entity which is an instrumentality of a State or of a municipal corporation, and
the phrase "general obligation of any State or of any
political subdivision of a State," is defined as "an
obligation supported by the full faith and credit of
the obligor," and includes an obligation payable from
a special fund when the full faith and credit of a State
or any political subdivision thereof is obligated for
payments into the fund of an amount which will be
sufficient to provide for any required payments in
connection with the obligation.
The Investment Securities Regulation, consistent
with the provisions contained in paragraph seventh
of 12 U.S.C. 24, does not require that a bond be
supported by general powers of taxation possessed by
the obligor of the bond in order that a bond may con-
stitute a public security. Neither the legislative history of the provisions of paragraph seventh of 12
U.S.C. 24, nor any relevant judicial decisions warrants
the imposition of such a requirement. In the case of
the bonds about which you inquire, the Port of New
York Authority has, as authorized by applicable law,
pledged its full faith and credit for the payment of
principal and interest thereon. Such bonds are thus
direct and general obligations of the Authority.
There exists no statutory authority on the basis of
which the Comptroller's Office, in the exercise of its
regulatory and supervisory responsibility as required
by paragraph seventh of 12 U.S.G. 24, could conclude
and, therefore, require as a condition precedent for
bonds being eligible for underwriting, that the political
unit issuing such bonds possess general powers of
taxation and that the bonds must be supported by
such powers.
VALUATION RESERVES AND LENDING
LIMITS
NOVEMBER 2,
1965.
This is in reply to your letter of October 19, 1965,
In which you inquire as to the extent to which a reserve for bad debts may be utilized for computing a
borrower's legal lending limit. It is your understanding that a State bank has recently converted to a
National bank in order to avail itself of the use of this
reserve in the computation of its lending limit. You
further inquire whether the elimination of such a reserve would be subject to corporate income taxation.
Paragraph 1100(c) of the "Comptroller's Manual
for National Banks" defines the term "unimpaired
surplus fund," as used in 12 U.S.C. 84, as excluding
"Internal Revenue formula bad debt reserve to the
extent taxable." Revenue Ruling 65-92 permits a
bank to deduct additions to its reserve for bad debts
until the reserve equals 2.4 percent of loans outstanding at the close of the taxable year. Any deductions
in excess of this percentage would be subject to taxation. Moreover, an elimination of the reserve would
be subject to taxation to the extent that the deductible
portion has not materialized in worthless loans and the
establishment of the reserve has resulted in a tax
benefit.
Accordingly, a bad debt reserve within this 2.4 percent limit recognized by the Internal Revenue Service
may be used in determining the bank's "unimpaired
surplus fund." In addition, any amount in the bank's
bad debt reserve in excess of this 2.4 percent limit may
also be used in determining the bank's "unimpaired
surplus fund" to the extent that such additional amount
is not subject to any further tax; i.e., the amount allocated to the bad debt reserve from income on which
tax has been paid and is, therefore, subject to no
further taxation.
WINDOW DRESSING
OCTOBER 14,
1965.
Hon. DANTE B. FASCELL,
Legal and Monetary Affairs Subcommittee of the
Committee on Government Operations, House of
Representatives, Washington, D.C.:
This is in reply to your letter of September 13, 1965,
requesting information on the actions of this Office
which accord with pertinent recommendations made
in the committee's report entitled, "Window Dressing
in Bank Reports."
Our original proposal to eliminate "Window dressing" in bank reports was the utilization of the surprise
call. The first yearend surprise call since 1916 was December 28, 1962. This date was proposed by the
Comptroller of the Currency and accepted by the Federal Reserve and the Federal Deposit Insurance Corporation. As you know, the law provides for call
dates which shall be selected by the Comptroller of the
Currency, the Chairman of the Board of Governors
of the Federal Reserve System, and the Chairman of
the Board of Directors of the Federal Deposit Insurance Corporation, or a majority thereof.
While we maintain the belief that genuine surprise
dates for call reports are the most effective method
for dealing with the problem of "window dressing,"
we, nevertheless, have explored with the Federal Reserve and the Federal Deposit Insurance Corporation
alternate means of solution. For the past 2 years, a
series of meetings have been held with representatives
of the other bank regulatory agencies regarding the
call report. As a result, beginning with the fourth
call for 1965, the forms used by the three agencies
will be basically uniform and will preserve the statistical and supervisory value of the report. The reporting banks will be required to furnish average
deposit and average loan figures for fifteen calendar
days prior to, and including, the call date. We believe the averaging method will to a large degree discourage "window dressing." In addition, our examiners are on the alert to uncover this deceptive
practice both in call reports and voluntary statements.
In cases where abuses are observed, this Office will
take supervisory measures as deemed appropriate.
In closing, we wish to thank your committee for its
assistance in dealing with this problem.
251
INDEX
Page
Addresses and selected congressional testimony of James
J. Saxon, Comptroller of the Currency
199
Annual Report 1965
11
Antitrust laws and the public welf are
213
Assets, deposits, and capital accounts
14, 171
Assets of consolidations of National banks or National
and State banks, calendar 1965
154
Assets of mergers of National banks or National and
State banks, calendar 1965
155
Assets of National banks converted from S tate chartered
banks, calendar 1965
151
Assets and liabilities of National banks:
Assets, liabilities, and capital of National banks, 1964
and 1965
15, 171
Date of last report of condition, December 31,1936-65. 198
By States:
June 30, 1965
174, 175
December 31, 1965
177, 178
Comparison of:
December 31, 1964 and December 31, 1965, and
percent change, 1964 to 1965
15
Principal items of, by size of bank (deposits), year
end 1964 and 1965
171
Foreign branches, December 31, 1965
197
Assets, trust accounts
182
Assets of selected financial institutions, 1962 and 1965..
14
Banks
145, 201, 202, 211, 214
Bank holding companies
202, 219
Bank Holding Act, extension of coverage
203
Bank mergers
225
Banking progress
214
Banking services
226
Benefits to National bank employees and officers:
By States, calendar 1965
184
By size of banks (deposits), calendar 1965
192
Total, years ended December 31, 1964 and 1965
18
Borrowings. (See Assets and liabilities of National
banks.)
Branches, new charters, and mergers
20
Branch litigation
28
Branches of National banks:
Domestic:
Number of:
Closed, by States, calendar 1965
169
Open for business, calendar 1965:
By States
161
By community size, and size of bank
27
Foreign:
Assets and liabilities of, summary of, December 31,
1965
197
Location of, December 31, 1965
196
Number of, in operation, 1955-64
197
Page
Bond discount
228
Business development corporations
228
Calls for reports of condition of National banks, 1914-65. 172
Capital accounts, assets, and deposits
14
Capital accounts:
Of National banks:
By States:
June 30, 1965
176
December 31, 1965
179
Comparison of:
December 31,1964, and December 31, 1965
15
Dollar and percent changes, December 1964 and
1965
15
Total, years ended December 31, 1964 and 1965.
18
Converted into State banks, calendar 1965
153
Merged and consolidated with or into State banks,
calendar 1965
152
Reported in voluntary liquidation, calendar 1965
151
By size of bank (deposits), calendar 1965
192
Of State banks:
Purchased by National banks, calendar 1965
153
Capital stock of National banks:
Years 1944-65
194
Years 1936-65
198
By States:
June 30, 1965
176
December 31, 1965
179
Changes, calendar 1965
24
Comparison of:
By size of banks (deposits), December 1964 and
1965
171
Total years ended December 31, 1964 and 1965..
18
By size of banks (deposits), calendar 1965
184
Capital stock of consolidations of National banks or
National and State banks, calendar 1965
154
Capital stock of mergers of National banks or National
and State banks, calendar 1965
155
Capital stock of National banks converted from State
banks
151
Cash in banks. (See Assets and liabilities of National
banks.)
Certificates of deposit
229, 231
Certification of branches
5
Charters of National banks. (See Organizations of
National banks.)
Chartering and entry
1
Closed banks. (See Consolidations, mergers, and liquidations.).
Commercial banks, banking offices, and total assets by
class of bank, end of 1964 and 1965
13
Trust department statistics, by States, calendar 1965. 181
253
Common stock of National banks:
Page
By States:
June 30, 1965
176
December 31, 1965
179
Years 1944-65
194
Common trust funds, by States, 1964 and 1965
182
Comptroller of the Currency, Office of:
Comptrollers, names of, since organization of the
Office, periods of service, and States from which
appointed
143
Deputy Comptrollers and Administrative Assistants,
by dates of appointment and resignation, and native
States
144
Income and expenses of, in year 1965
37
Issue and redemption of currency
38
Comptroller's equity
37
Congressional testimony (Appendix C)
199
Consolidations or National banks, or National and
State banks, calendar 1965
154
Consolidations and mergers of National banks:
Description of each consolidation, merger, and purchase and sale transaction, approved by the Comptroller of the Currency, calendar 1965
154
Number of, by States, since 1863
145
With and into State banks, calendar 1965
152
Conversions of National banks to State banks, by States,
since 1863
152
Data processing affiliate
229
Definition of deposits
230
Demand deposits. (See Deposits.)
Deposits. (See Assets and liabilities of banks)
171, 175
Deposits, assets, and capital accounts
14
Deposits in savings and loan associations
235
Deposits of National banks:
Demand and time:
By States:
June 30, 1965
175
December 31, 1965
178
By class of banks, year end 1964 and 1965
16
Directors' examinations
235
Disclosure standards for banks—achievements and goals.
211
Discounts. (See Loans and discounts.)
Dividends. (See Income, expenses, and dividends of
National banks.)
18
Dividends and ratios to capital accounts of National
banks, years 1944-64
194
Educational loans—Higher Education Act of 1965
235
Expenses. (See Comptroller of the Currency, Office of;
Income, expense, and dividends of National banks.)
Expenses and income of National banks
18, 184
Expenses of the Office of the Comptroller of the Currency
for 1965
37, 38
FDIC Board composition
236
Fees paid to director and members of executive, discount,
and other committees of National banks:
By States, calendar 1965
84
By size of banks (deposits), calendar 1965
192
Total, years ended December 31, 1964 and 1965
18
Fiduciary activities of National banks
30
Furniture and equipment of National banks:
By States, calendar 1965
184
By size of bank (deposits), calendar 1965
192
Total years ended December 31, 1964 and 1965
18
254
Income after dividends of National banks:
Page
By States, calendar 1965
184
By size of banks (deposits), calendar 1965
192
Years ended December 31, 1964 and 1965
18
Income and expenses of National banks
184
Income and expenses of the Office of the Comptroller
of the Currency
36
Income before dividends of National banks:
By States, calendar 1965
184
By size of banks (deposits), calendar 1965
192
Years ended December 31, 1964 and 1965
18
Income before taxes of National banks:
By States, calendar 1965
184
By size of banks (deposits), calendar 1965
192
Years ended December 31, 1964 and 1965
18
Income of the Office of the Comptroller of the Currency for 1965
37, 38
Independent audits
237
Insolvencies of National banks, by States, since 1 8 6 3 . . . .
145
Interest and discounts on National banks:
Loans:
By States, calendar 1965
184
By size of banks (deposits), calendar 1965
192
Years ended December 31, 1964 and 1965
18
Borrowed money:
By States, calendar 1965
184
By size of banks (deposits), calendar 1965
192
Years ended December 31, 1964 and 1965
18
Interest and dividends of U.S. Government obligations
and other securities of National banks:
By States, calendar 1965
184
By size of banks (deposits), calendar 1965.
192
Years ended December 31, 1964 and 1965
18
Interest on time and savings deposits of National banks:
By States, calendar 1965
184
By size of banks (deposits), calendar 1965
192
Years ended December 31, 1964 and 1965
18
Interest rates—State laws
237
International banking and finance
31
International operations
238
Investments and loans between members of the holding
company groups
204
Issue and redemption of currency
38
Leasing of public facilities
238
Lending limit—parent company and subsidiary
239
Liabilities. (See Assets and liabilities of National
banks.)
Liquidations of National banks:
Since 1863, by States
145
By categories, calendar 1965
24
(Voluntary) reported in calendar 1965
151
Litigation
28
Loans for purchase of convertible bonds
239
Loans of National banks:
Losses and recoveries on, calendar years 1945—65....
195
Ratio of new losses or recoveries to, calendar years
1945-65.
195
Loans and discounts of National banks:
By States:
June 30, 1965
174
December 31, 1965
180
By size of banks (deposits), December 1964 and 1965..
171
December 1936-65
198
Page
Loans and securities of National banks, by size of
banks (deposits), December 1964 and 1965
Loans secured by U.S. obligations
Loans to wholly owned affiliate
Losses charged to valuation reserves of National banks:
By States, calendar 1965
Losses, chargeoffs, and transfers to valuation reserves on
securities and loans of National banks:
By States, calendar 1965
By size of banks (deposits), calendar 1965
Years ended December 31, 1964 and 1965
Mail service
Mechanical receipt of funds
Management improvement
Mergers, action on
Mergers, calendar 1965
Merger decisions, 1965 (Appendix A)
Merger litigation
Mergers, new charters, and branches
Mergers of National banks or National and State banks,
calendar 1955
Merger or consolidation of National banks with or into
State banks, calendar 1965
Merger policy, current issues
Mortgage company loan solicitation
National banks:
As guarantor
Assets and liabilities. (See Assets and liabilities of National banks.)
Branches. (See Branches of National banks.)
Galls for reports of condition of, years 1914-65
Mergers. (See Mergers of National banks.)
Number of:
By States:
Organized, consolidated, and merged since 1863.
Insolvencies, liquidations, and conversions since
1863
June 30, 1965
December 31, 1965
Chartered during calendar 1965
In existence, December 31, 1965
December 31, 1944-65
Converted into State banks, calendar 1965
Stock sales—bylaws
New bank charger litigation
New charters, branches, and mergers
Operating earnings of National banks:
By States, calendar 1965
By size of banks (deposits), calendar 1965
Total, years ended December 31, 1964 and 1965
Operating expenses of National banks:
By States, calendar 1965
By size of banks (deposits), calendar 1965
Total, years ended December 31, 1964 and 1965
Operating revenue, expenses, and dividends of National
banks:
By States, calendar 1965
By size of banks (deposits), calendar 1965
Total, years ended December 31, 1964 and 1965
180
240
240
184
184
193
18
240
241
29
9
27
39
29
20
155
152
201
241
242
172
145
145
174
21
148
145
194
153
242
29
17
184
192
18
184
192
18
184
192
18
Organizations of National banks:
Number of, by States, December 31, 1965
21
Charters:
Applications approved and rejected, by States,
calendar 1965
146
Granted, by States, calendar 1965
148
Converted from State chartered banks, calendar
1965
151
Preemptive rights
242
Profits, recoveries, and transfers from valuation reserves
on securities of National banks:
By States, calendar 1965
184
By size of banks (deposits), calendar 1965
192
Promissory notes
231, 243
Real estate assets of National banks, by size of banks
(deposits), December 1964 and 1965
171
Recoveries, transfers from valuation reserves, and profits
of National banks:
By States, calendar 1965
184
By size of banks (deposits), calendar 1965
192
Total, years ended December 31, 1964 and 1965
18
Recoveries credited to valuation reserves of National
banks:
By States, calendar 1965
184
Total, years ended December 31, 1964 and 1965
18
Redemption and issue of currency
38
Regional organization
30
Regulation litigation
29
Repurchase transactions
232
Salaries and wages officers and employees of National
banks:
By States, calendar 1965
184
By size of banks (deposits), calendar 1965
192
Total, years ended December 31, 1964 and 1965
18
Securities of National banks:
Calendar years 1945-64
195
Recoveries on, calendar 1945-65
195
Secured notes
233
Selected Correspondence of James J. Saxon, Comptroller
of the Currency
217
State banks purchased by National banks, calendar
1965
153
State chartered banks converted to National banks,
calendar 1965
151
State escheat laws
244
State of the National banking system
13
Statistical tables (Appendix B)
141
State taxes on National banks
244
Structural changes in the National banking system
20
Stock option and purchase plans
245
Surplus funds—definition on dividend purposes
246
Surplus, undivided profits and reserves of National
banks:
By States:
June 30, 1965
176
December 31, 1965
179
December 1936-65
198
By size of banks (deposits), December 1964 and 1965. .
171
Converted from State chartered banks, calendar 1965.
151
255
Page
Surplus, undivided profits and reserves of consolidations
of National banks or National and State banks, calendar 1965
154
Surplus, undivided profits and reserves of mergers of
National banks or National and State banks, calendar
1965
155
Surplus, undivided profits and reserves of National banks
converted from State banks, calendar 1965
151
Taxes (Federal and State) on net income of National
banks:
By States, calendar 1965
184
By size of banks (deposits), calendar 1965
192
Years, ended December 31, 1964 and 1965
18
Time deposit competition
206, 209, 248
Trust activity—State licensing
246
256
Trust department revenue of National banks:
By States, calendar 1965
By size of banks (deposits), calendar 1965
Years ended December 31, 1964 and 1965
Trust offices and branch laws
:
Trust statistics, selected bank, by States, calendar 1965..
Trust services—banks and bar associations
Underwriting
United States Government obligations of National
banks:
By States:
June 30, 1965
December 31, 1965
By size of banks (deposits), December 1964 and 1965..
December 1936-65
Valuation reserves and lending limits.
Window dressing
Page
184
192
18
247
181
247
250
174
177
171
198
251
251
@FedFRASER